Wealth, Portfolios, and Unemployment Duration

Francois Fontaine, Janne Nyborg Jensen () and Rune Vejlin
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Janne Nyborg Jensen: DORS

No 13423, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We use administrative data on individual balance sheets in Denmark to document how an individual's financial position affects job search behavior. We look at the effect of wealth at the entry into unemployment on the exit rate from unemployment as well as the effect on the subsequent match quality. The detailed data allows us not only to distinguish between liquid and illiquid parts, but also to decompose each of them into assets and liabilities. The decomposition of wealth into these four components is key to understanding how wealth affects job finding rates. In particular, we show that liquid assets reduce the probability of becoming re-employed, but we do not see an effect of liquid liabilities or the illiquid wealth components, while interest payments speed up re-employment. The results on subsequent match quality in form of job duration and wages are mixed.

Keywords: non-employment duration; wealth composition; job search behavior (search for similar items in EconPapers)
JEL-codes: J6 J64 J65 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2020-06
New Economics Papers: this item is included in nep-lab
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Related works:
Journal Article: Wealth, Portfolios, and Nonemployment Duration (2024)
Working Paper: Wealth, Portfolios, and Unemployment Duration (2024)
Working Paper: Wealth, Portfolios, and Unemployment Duration (2024)
Working Paper: Wealth, Portfolios, and Unemployment Duration (2019)
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