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Family ties: occupational responses to cope with a household income shock

Listed author(s):
  • Massimo Baldini

    ()

  • Costanza Torricelli

    ()

  • Maria Cesira Urzì Brancati

In this paper we analyse household members’ reactions in case of unforeseen negative income shocks due to a transition into unemployment and/or into income support. More specifically, we estimate the impact of an income loss suffered by one household member on the probability that another household member – not necessarily the wife - transit from out of the labour force into employment or into workforce. Since in a lifecycle setting the labour supply of secondary workers is also affected by credit constraints, we take into account financial wealth and liabilities as well as a measure of household illiquidity due to housing. To perform our analyses, we use a discrete choice model and data drawn from the Bank of Italy Survey on Household Income and Wealth (SHIW) over the period 2004-2012, so as to include the effects of the Great Recession. Even after accounting for standard socio-economic controls, results show significant reactions to income shocks, especially during the recession. As for portfolio controls, we find a significant difference (mostly in terms of intercept, but also of slope) between the level of illiquidity and labour market participation for households hit/not hit by a shock.

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File URL: http://155.185.68.2/campusone/web_dep/CappPaper/Capp_p115.pdf
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Paper provided by Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi" in its series Center for the Analysis of Public Policies (CAPP) with number 0115.

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Length: pages 32
Date of creation: Apr 2014
Handle: RePEc:mod:cappmo:0115
Contact details of provider: Web page: http://www.capp.unimore.it

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