How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Datasets

Asger Lau Andersen, Amalie Sofie Jensen, Niels Johannesen, Claus Thustrup Kreiner, Søren Leth-Petersen and Adam Sheridan

American Economic Journal: Applied Economics, 2023, vol. 15, issue 4, 1-29

Abstract: 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.

JEL-codes: D12 G21 G51 J64 J65 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (15)

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Related works:
Working Paper: How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Data Sets (2021)
Working Paper: How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Data Sets (2020)
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DOI: 10.1257/app.20210206

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