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Liquidity constraints and labor supply

Author

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  • Mariacristina Rossi

    () (University of Turin and CeRP, Collegio Carlo Alberto)

  • Serena Trucchi

    () (University of Bologna)

Abstract

In this paper we show how liquidity constraints shape Italian households' decisions with regard to supplying their labor. One way to neutralize binding liquidity constraints is by resorting to supplying additional labor, instead of reducing consumption patterns. We estimate whether this channel is at work by using the Survey of Households Income and Wealth (SHIW) sample. In our analysis we are also able to detect whether actual labor supply differs from the desired one. Our results show that liquidity constraints foster female participation in the labor force and increase the intensity in the supply of men's labor.

Suggested Citation

  • Mariacristina Rossi & Serena Trucchi, 2012. "Liquidity constraints and labor supply," CeRP Working Papers 127, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  • Handle: RePEc:crp:wpaper:127
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    References listed on IDEAS

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    Cited by:

    1. Osmani, Ahmad Reshad & Okunade, Albert A., 2019. "Cancer survivors in the labor market: Evidence from recent US micro-panel data," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 202-221.
    2. NAGORE GARCIA Amparo & ROSSI Cristina & VAN SOEST Arthur, 2018. "Labour Market Decisions of the Self-Employed in the Netherlands at the Statutory Retirement Age," LISER Working Paper Series 2018-13, LISER.
    3. Giné, Xavier & Martinez-Bravo, Monica & Vidal-Fernández, Marian, 2017. "Are labor supply decisions consistent with neoclassical preferences? Evidence from Indian boat owners," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 331-347.
    4. Perugini, Cristiano, 2020. "Patterns and drivers of household income dynamics in Russia : The role of access to credit," BOFIT Discussion Papers 11/2020, Bank of Finland, Institute for Economies in Transition.
    5. Anil Kumar & Che-Yuan Liang, 2018. "Labor Market Effects of Credit Constraints: Evidence from a Natural Experiment," Working Papers 1810, Federal Reserve Bank of Dallas, revised 01 Sep 2018.
    6. Ian Fillmore & Trevor Gallen, 2019. "Heterogeneity in Talent or in Tastes? Implications for Redistributive Taxation," 2019 Meeting Papers 94, Society for Economic Dynamics.

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    JEL classification:

    • D1 - Microeconomics - - Household Behavior

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