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Do the Rich Stay Unemployed Longer? An Empirical Study for the UK

Author

Listed:
  • Elena Stancanelli

    (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, IZA - Institute for the Study of Labor - Institute for the Study of Labor)

Abstract

This paper investigates the impact of individual asset holdings on the probability of leaving unemployment. According to the theory, higher levels of financial wealth will result in higher reservation wages and longer unemployment durations. I estimate the impact of financial assets on the hazard rate, using data for Great Britain. The empirical findings indicate that individual asset holdings affect significantly the escape rate out of unemployment. In particular, negative (positive) levels of wealth increase (reduce) the hazard of leaving unemployment. The size of the impact is, however, rather small. Increasing by 100% the level of wealth of a representative individual, with net wealth and other individual characteristics equal to the sample mean, increases the duration of the unemployment spell by half a week.

Suggested Citation

  • Elena Stancanelli, 1999. "Do the Rich Stay Unemployed Longer? An Empirical Study for the UK," Post-Print hal-03417570, HAL.
    • Handle: RePEc:hal:journl:hal-03417570
    DOI: 10.1111/1468-0084.00131
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    Citations

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    Cited by:

    1. Kalwij, A.S., 1998. "Household Wealth, Female Labor Force Participation and Fertility Decisions," Other publications TiSEM 4b6a2e9d-ecd6-4c2f-9352-7, Tilburg University, School of Economics and Management.
    2. Bloemen, Hans G & Stancanelli, Elena G F, 2001. "Individual Wealth, Reservation Wages, and Transitions into Employment," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 400-439, April.
    3. Bauer, Christian, 2011. "On the reservation wage under CARA and limited borrowing," Mathematical Social Sciences, Elsevier, vol. 62(2), pages 126-129, September.
    4. Bloemen, Hans G. & Stancanelli, Elena G.F., 2001. "Financial wealth, consumption smoothing, and income shocks due to job loss," Serie Research Memoranda 0036, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    5. Ben Lodewijks, 2011. "Financial Constraints and Job Mobility in Australia," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 61-75, March.
    6. Haomin Wang, 2019. "Intra-Household Risk Sharing and Job Search over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 34, pages 165-182, October.
    7. Martin Browning & Thomas F. Crossley & Eric F. Smith, 2007. "Asset Accumulation and Short Term Employment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 400-423, July.
    8. repec:spo:wpmain:info:hdl:2441/9704 is not listed on IDEAS
    9. Mário Centeno & Álvaro A. Novo, 2014. "Do Low-Wage Workers React Less to Longer Unemployment Benefits? Quasi-Experimental Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(2), pages 185-207, April.
    10. Khurshid Alam & Sakiba Tasneem & Molla Huq, 2014. "Reservation wage of female volunteer community health workers in Dhaka urban slums: a bidding game approach," Health Economics Review, Springer, vol. 4(1), pages 1-10, December.
    11. Yann Algan & Antoine Terracol, 2001. "L'influence de l'épargne de précaution sur la recherche d'emploi," Post-Print hal-01017893, HAL.
    12. Yann Algan & Antoine Terracol, 2001. "L'influence de l'épargne de précaution sur la recherche d'emploi," Économie et Statistique, Programme National Persée, vol. 349(1), pages 63-76.
    13. Namkee Ahn & José Ignacio García-Pérez, 2002. "Unemployment duration and workers' wage aspirations in Spain," Spanish Economic Review, Springer;Spanish Economic Association, vol. 4(2), pages 103-118.
    14. Tricia Gladden & Michelle Alexopoulos, 2004. "The Effects of Wealth, and Unemployment Benefits on Search Behavior and Labor Market Transitions," Econometric Society 2004 North American Summer Meetings 517, Econometric Society.
    15. Massimo Baldini & Costanza Torricelli & Maria Cesira Urzì Brancati, 2018. "Family ties: Labor supply responses to cope with a household employment shock," Review of Economics of the Household, Springer, vol. 16(3), pages 809-832, September.
    16. Bloemen, Hans, 2006. "The Impact of Wealth on Job Exit Rates of Elderly Workers," IZA Discussion Papers 2247, IZA Network @ LISER.
    17. repec:spo:wpmain:info:hdl:2441/8884 is not listed on IDEAS
    18. repec:spo:wpecon:info:hdl:2441/9704 is not listed on IDEAS
    19. Kalwij, A.S., 1999. "Household consumption, female employment and fertility decisions : A microeconometric analysis," Other publications TiSEM df8c4604-06f9-4a49-855a-1, Tilburg University, School of Economics and Management.
    20. Per Krusell & Toshihiko Mukoyama & Richard Rogerson & Ayşegül Şahin, 2017. "Gross Worker Flows over the Business Cycle," American Economic Review, American Economic Association, vol. 107(11), pages 3447-3476, November.
    21. repec:spo:wpecon:info:hdl:2441/8884 is not listed on IDEAS

    More about this item

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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