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The growth in permanent contracts and its potential impact on spending

Author

Listed:
  • Brindusa Anghel

    (Banco de España)

  • Cristina Barceló

    (Banco de España)

  • Ernesto Villanueva

    (Banco de España)

Abstract

Rationale This article analyses what impact the increase in permanent contracts observed over the course of 2022 might have had on household spending. Takeaways •In 2019, workers on permanent contracts devoted 81% (on average) of their household income to spending, compared with 72% for those on temporary contracts. •In the past, having their temporary contract converted to a permanent one has prompted households to increase their spending-to-income ratio by approximately 20% over the following two quarters. •Based on those figures, the conversion of temporary to permanent contracts observed in 2022 could have increased the spending-to-income ratio by between 0.18 and 0.24 percentage points.

Suggested Citation

  • Brindusa Anghel & Cristina Barceló & Ernesto Villanueva, 2023. "The growth in permanent contracts and its potential impact on spending," Economic Bulletin, Banco de España, issue 2023/Q1.
    • Handle: RePEc:bde:journl:y:2023:i:01:n:19
    DOI: https://doi.org/10.53479/29793
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    References listed on IDEAS

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    1. Blundell, Richard & M. Stoker, Thomas, 1999. "Consumption and the timing of income risk," European Economic Review, Elsevier, vol. 43(3), pages 475-507, March.
    2. Barceló, Cristina & Villanueva, Ernesto, 2016. "The response of household wealth to the risk of job loss: Evidence from differences in severance payments," Labour Economics, Elsevier, vol. 39(C), pages 35-54.
    3. Campos, Rodolfo G. & Reggio, Iliana, 2015. "Consumption in the shadow of unemployment," European Economic Review, Elsevier, vol. 78(C), pages 39-54.
    4. Alba Lugilde & Roberto Bande & Dolores Riveiro, 2018. "Precautionary saving in Spain during the great recession: evidence from a panel of uncertainty indicators," Review of Economics of the Household, Springer, vol. 16(4), pages 1151-1179, December.
    5. Nathaniel Hendren, 2017. "Knowledge of Future Job Loss and Implications for Unemployment Insurance," American Economic Review, American Economic Association, vol. 107(7), pages 1778-1823, July.
    6. James Banks & Richard Blundell & Agar Brugiavini, 2001. "Risk Pooling, Precautionary Saving and Consumption Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(4), pages 757-779.
    7. Cristina Barceló & Ernesto Villanueva, 2018. "The risk of job loss, household formation and housing demand: evidence from differences in severance payments," Working Papers 1849, Banco de España.
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    Cited by:

    1. Lafuente, Cristina & Ruland, Astrid & Santaeulàlia-Llopis, Raül & Visschers, Ludo, 2023. "The effects of Covid-19 on couples’ job tenures: Mothers have it worse," Labour Economics, Elsevier, vol. 83(C).

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    More about this item

    Keywords

    Permanent contracts; permanent seasonal contracts; spending-to-income ratio; saving;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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