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Does Job Insecurity Affect Household Consumption?

  • Andrew Benito

    ()

    (Banco de España)

The paper confronts a key implication of the precautionary model of saving/consumption, using micro-data on British households. The results provide support for the key proposition that job insecurity affects consumption. A one standard deviation increase in unemployment risk for the head of household is estimated to reduce consumption by 2.7 per cent. This effect is greater for the young, those without non-labour income and manual workers—for whom precautionary effects might be expected to be stronger a priori. Consumer durables purchases are also found to be inversely related to unemployment risk.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/02/Fic/dt0225e.pdf
File Function: First version, October 2002
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Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0225.

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Length: 40 pages
Date of creation: Oct 2002
Date of revision:
Handle: RePEc:bde:wpaper:0225
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