Labour supply as a buffer: evidence from UK households

Andrew Benito () and Jumana Saleheen
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Andrew Benito: Bank of England, Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH

No 426, Bank of England working papers from Bank of England

Abstract: This paper examines labour supply adjustment – both hours worked and participation decisions. The analysis focuses on the response of each to financial shocks, employing data from the British Household Panel Survey. Results suggest that employees whose financial situation deteriorates relative to what they expected, increase their labour supply in response. That response is consistent with models of self-insurance that incorporate labour supply flexibility. The shock reflects several factors including financial wealth and a partner’s employment situation. The response is significantly larger for those who change job, consistent with the importance of hours constraints within jobs. The propensity to participate in the labour market also appears to respond to the financial shock but that is somewhat less robust than the hours response.

Keywords: Labour supply; self-insurance. (search for similar items in EconPapers)
JEL-codes: J22 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011-05-27
New Economics Papers: this item is included in nep-eur, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Labour Supply as a Buffer: Evidence from UK Households (2013)
Working Paper: Labour Supply as a Buffer: Evidence from UK Households (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0426

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