Unemployment Insurance Benefit Levels and Consumption Changes
AbstractWe use a survey of unemployed people to examine how a job loss impacts on household expenditures. The principle focus is on the effect of the level of income replacement provided by Unemployment Insurance. We restrict attention to a sub-sample of respondents who are still in their first spell of unemployment after six months. For this group we find large consumption falls, averaging about 16% of total expenditure. The actual fall depends on a variety of factors of which the most important is the pre-job loss ratio of the respondent's income to hosuehold income. The effects of varying the replacement ratio are relatively small. We only find effects for those who did not have assets at the job loss and even for them the elasticity of total expenditure with respect to benefit is msall. We conclude that for most of our sample, small changes in the benefit level will have no effect on living standards within the household and hence on other facets of behavious such as job search, unemployment duration and the quality of any new job taken.
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Bibliographic InfoPaper provided by McMaster University in its series Department of Economics Working Papers with number 1996-01.
Length: 38 pages
Date of creation: Jan 1996
Date of revision:
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Other versions of this item:
- Browning, Martin & Crossley, Thomas F., 2001. "Unemployment insurance benefit levels and consumption changes," Journal of Public Economics, Elsevier, vol. 80(1), pages 1-23, April.
- Martin Browning & Thomas Crossley, . "Unemployment Insurance Benefit Levels and Consumption Changes," Canadian International Labour Network Working Papers 25, McMaster University.
- Martin Browning & Thomas Crossley, 1999. "Unemployment Insurance Benefit Levels and Consumption Changes," CEPR Discussion Papers 405, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Martin Browning & Thomas Crossley, 1996. "Unemployment Insurance Benefit Levels and Consumption Changes," Discussion Papers 96-11, University of Copenhagen. Department of Economics.
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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