American Economic Journal: Applied Economics
no. 4, October 2023
How much and through which channels do households self-insure against job loss? Combining data from a large bank and from government sources, we quantify a broad range of responses to job loss in a unified empirical framework. Cumulated over a two-year period, households reduce spending by 30 percent of their income loss. They mainly self-insure through adjustments of liquid balances, which account for 50 percent of the income loss. Other channels—spousal labor supply, private transfers, home equity extraction, mortgage refinancing, and consumer credit—contribute less to self-insurance. Both overall self-insurance and the channels vary with household characteristics in intuitive ways.
Andersen, Asger Lau, Amalie Sofie Jensen, Niels Johannesen, Claus Thustrup Kreiner, Søren Leth-Petersen, and Adam Sheridan.
"How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Datasets."
American Economic Journal: Applied Economics,
Consumer Economics: Empirical Analysis
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Household Finance: Household Saving, Borrowing, Debt, and Wealth
Unemployment: Models, Duration, Incidence, and Job Search
Unemployment Insurance; Severance Pay; Plant Closings