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Unemployment and Consumption: Are Job Losses Less Painful Near the Mediterranean?

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  • Samuel Bentolila
  • Andrea Ichino

Abstract

In this paper we analyze the relationship between unemployment and consumption. We study this relationship with panel data on households in five countries: Spain, Italy, Germany, Britain, and the US. Our empirical results indicate that an increase in the duration of unemployment spells of male household heads is associated with smaller consuption losses in Spanish and Italian households. We discuss this finding in the light of different market and insitutional frameworks. The evidence supports the hypothesis that extended family networks, which appear to be stronger near the Mediterranean, provide a fundamental source of insurance against unemployment in southern Europe.

Suggested Citation

  • Samuel Bentolila & Andrea Ichino, 2000. "Unemployment and Consumption: Are Job Losses Less Painful Near the Mediterranean?," Working Papers wp2000_0010, CEMFI.
    • Handle: RePEc:cmf:wpaper:wp2000_0010
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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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