Consumption and Unemployment

Mark Dynarski and Steven Sheffrin ()

The Quarterly Journal of Economics, 1987, vol. 102, issue 2, 411-428

Abstract: This paper examines consumption changes of workers following experiences of unemployment in different stochastic environments. The model developed in the paper predicts that consumption changes following unemployment spells should be small for workers the higher are their layoff and recall probabilities. These predictions are confirmed in estimates with panel data.

Date: 1987
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