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Labour supply responses to financial wealth shocks: evidence from Italy

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Listed:
  • Renata Bottazzi

    () (Institute for Fiscal Studies and University of Bologna)

  • Serena Trucchi

    (Institute for Fiscal Studies)

  • Matthew Wakefield

    () (Institute for Fiscal Studies and University of Bologna)

Abstract

We look at how strongly shocks to asset values affect labour supply, using Italian data. We use asset price shocks to provide a measure of wealth changes that is exogenous to households’ saving and labour supply. Our results point to significant effects of wealth on hours of work and on whether or not agents leave their jobs. The magnitude of these effects can be substantial, for example for those individuals who suffered larger wealth losses during the financial crisis. Family effects reflect similar responses from men and women on average. Older working-age individuals drive the population results.

Suggested Citation

  • Renata Bottazzi & Serena Trucchi & Matthew Wakefield, 2017. "Labour supply responses to financial wealth shocks: evidence from Italy," IFS Working Papers W17/29, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:17/29
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    References listed on IDEAS

    as
    1. Renata Bottazzi & Serena Trucchi & Matthew Wakefield, 2017. "Labour supply responses to financial wealth shocks: evidence from Italy," IFS Working Papers W17/29, Institute for Fiscal Studies.
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    7. Renata Bottazzi & Serena Trucchi & Matthew Wakefield, 2020. "Consumption Responses to a Large Shock to Financial Wealth: Evidence from Italy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(2), pages 762-789, April.
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    Cited by:

    1. Renata Bottazzi & Serena Trucchi & Matthew Wakefield, 2017. "Labour supply responses to financial wealth shocks: evidence from Italy," IFS Working Papers W17/29, Institute for Fiscal Studies.
    2. 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.

    More about this item

    Keywords

    Labour Supply; Financial wealth shocks; Wealth effects;

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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