IDEAS home Printed from https://ideas.repec.org/a/spr/portec/v24y2025i1d10.1007_s10258-024-00254-9.html
   My bibliography  Save this article

Response of consumers to wage shocks in the framework of the Portuguese assistance program

Author

Listed:
  • Nuno Alves

    (Banco de Portugal)

  • Fátima Cardoso

    (Banco de Portugal)

  • Manuel Coutinho Pereira

    (Banco de Portugal)

Abstract

This paper studies the impact on consumption of the exogenous changes in public wages in Portugal during and after the economic and financial assistance program (2011-2014), by exploiting the variability in the size of such changes across municipalities. The initial wage cuts triggered a marked reduction of private consumption, while the reinstatements in the later years gave rise to an increase, albeit of a smaller magnitude. The consumption response was larger for employees with relatively lower wages. Households smoothed the impact on consumption of negative income shocks partly by drawing down their deposits. Consumer credit did not play such a role, as households deleveraged as a response to those negative shocks.

Suggested Citation

  • Nuno Alves & Fátima Cardoso & Manuel Coutinho Pereira, 2025. "Response of consumers to wage shocks in the framework of the Portuguese assistance program," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 24(1), pages 5-33, January.
    • Handle: RePEc:spr:portec:v:24:y:2025:i:1:d:10.1007_s10258-024-00254-9
    DOI: 10.1007/s10258-024-00254-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10258-024-00254-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10258-024-00254-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:portec:v:24:y:2025:i:1:d:10.1007_s10258-024-00254-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.