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

Asger Lau Andersen, Amalie Sofie Jensen, Niels Johannesen, Claus Kreiner, Søren Leth-Petersen and Adam Sheridan
Additional contact information
Asger Lau Andersen: CEBI, Department of Economics, University of Copenhagen
Amalie Sofie Jensen: Department of Economics, Princeton University
Adam Sheridan: CEBI, Department of Economics, University of Copenhagen

No 20-12, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: How do households respond to job loss, and which self-insurance channels are most important? By linking customer data from the largest bank in Denmark with information from government administrative registers, we quantify a broad range of responses to job loss in a unified empirical framework. Two response margins stand out: during the first 24 months after job loss, households reduce spending by 30% of the income loss while reduced saving in liquid assets accounts for 50%. Other response margins highlighted in the literature - spousal labor supply, private transfers, home equity extraction, mortgage refinancing, and consumer credit - are less important.

Keywords: Household economics; unemployment; self-insurance; transaction data (search for similar items in EconPapers)
JEL-codes: D14 G51 G52 J65 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020-04-17
New Economics Papers: this item is included in nep-gen, nep-ias and nep-lab
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https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_12-20.rev.pdf (application/pdf)

Related works:
Journal Article: How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Datasets (2023)
Working Paper: How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Data Sets (2021)
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