The consumption response to unemployment: evidence from French bank account data

Lorsqu’ils perdent leur emploi, les ménages puisent-ils dans leur épargne ou réduisent-ils leurs dépenses ? – une approche par des données de comptes bancaires

Odran Bonnet (), François Le Grand (), Tom Olivia, Xavier Ragot () and Lionel Wilner ()
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Odran Bonnet: INSEE - Institut national de la statistique et des études économiques (INSEE)
François Le Grand: Rennes SB - Rennes School of Business
Tom Olivia: INSEE - Institut national de la statistique et des études économiques (INSEE)
Xavier Ragot: Sciences Po - Sciences Po
Lionel Wilner: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: The loss of a job results in a reduction in income, as unemployment benefits provide only partial compensation for the loss of wages. This study investigates the financial adaptations made by households in response to such circumstances. Do they draw on their savings to maintain their consumption level or are they forced to reduce their expenditures? This paper uses French high frequency bank account data to measure how spending responds to job loss. Our findings indicate that, in the first six months of unemployment, 36% of the income loss is offset by a reduction in spending, while the remainder is primarily compensated by a decrease in liquid savings. The longer the unemployment spell, the greater the reduction in spending. Only 5% of the income loss is offset by a reduction in spending one month after the job loss. However, this figure reaches 46% six months after the initial job loss. The response depends on the quantity of liquid assets held by households, while being less influenced by income.

Keywords: Unemployment insurance; Bank account data; Marginal propensity to consume; Propension marginale à consommer; Assurance chômage; Données sur les comptes bancaires (search for similar items in EconPapers)
Date: 2024-10-08
Note: View the original document on HAL open archive server: https://insee.hal.science/hal-05316543v1
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