Job displacement insurance and (the lack of) consumption-smoothing
| Autor: | Joana Naritomi, François Gerard |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
Consumption (economics)
HB Economic Theory Economics and Econometrics Layoff 05 social sciences Consumption smoothing Displacement (psychology) Shock (economics) HD Industries. Land use. Labor Permanent income hypothesis Insurance policy 0502 economics and business Economics Demographic economics 050207 economics 050205 econometrics Severance |
| Popis: | We study the spending profile of workers who experience both a positive transitory income shock (lump-sum severance pay) and a negative permanent income shock (layoff). Using de-identified expenditure and employment data from Brazil, we show that workers increase spending at layoff by 35 percent despite experiencing a 14 percent long-term loss. We find high sensitivity of spending to cash-on-hand across consumption categories and for several sources of variation, including predictable income drops. A model with present-biased workers can rationalize our findings, and highlights the importance of the timing of benefit disbursement for the consumption-smoothing gains of job displacement insurance policies. (JEL D12, G51, J65, J63, O12) |
| Databáze: | OpenAIRE |
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