Liquidity constraints and labor supply

Mariacristina Rossi and Serena Trucchi

No 127, CeRP Working Papers from Center for Research on Pensions and Welfare Policies, Turin (Italy)

Abstract: In this paper we show how liquidity constraints shape Italian households' decisions with regard to supplying their labor. One way to neutralize binding liquidity constraints is by resorting to supplying additional labor, instead of reducing consumption patterns. We estimate whether this channel is at work by using the Survey of Households Income and Wealth (SHIW) sample. In our analysis we are also able to detect whether actual labor supply differs from the desired one. Our results show that liquidity constraints foster female participation in the labor force and increase the intensity in the supply of men's labor.

Pages: 28 pages
Date: 2012-10
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Related works:
Journal Article: Liquidity constraints and labor supply (2016)
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