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Labour Supply as a Buffer: Evidence from UK Households

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  • Benito, Andrew

    (University of Warwick)

  • Saleheen, Jumana

    (Bank of England)

Abstract

This paper examines labour supply adjustment – both hours worked and participation decisions. We focus on the response of each to financial shocks, employing data from the BHPS. Estimated responses are broadly consistent with models of self-insurance that incorporate labour supply flexibility. The shock reflects several factors including financial wealth and a partner's employment situation. The response is significantly larger for those who change job, consistent with the importance of hours constraints within jobs. The propensity to participate in the labour market also appears to respond to the financial shock but that is somewhat less robust than the hours response.

Suggested Citation

  • Benito, Andrew & Saleheen, Jumana, 2012. "Labour Supply as a Buffer: Evidence from UK Households," IZA Discussion Papers 6506, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6506
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    Cited by:

    1. Giovanni Razzu & Carl Singleton & Mark Mitchell, 2020. "On why the gender employment gap in Britain has stalled since the early 1990s," Industrial Relations Journal, Wiley Blackwell, vol. 51(6), pages 476-501, November.
    2. Razzu, Giovanni & Singleton, Carl & Mitchell, Mark, 2018. "On why gender employment equality in Britain has stalled since the early 1990s," MPRA Paper 87190, University Library of Munich, Germany.
    3. Daniel Borowczyk-Martins & Etienne Lalé, 2019. "Employment Adjustment and Part-Time Work: Lessons from the United States and the United Kingdom," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(1), pages 389-435, January.
    4. L. Bryan, Mark & Longhi, Simonetta, 2013. "Couples’ labour supply responses to job loss: boom and recession compared," ISER Working Paper Series 2013-20, Institute for Social and Economic Research.
    5. Miroslava Knapková & Mariana Považanová, 2021. "(Un)Sustainability of the Time Devoted to Selected Housework—Evidence from Slovakia," Sustainability, MDPI, vol. 13(4), pages 1-19, February.
    6. Rossi, Mariacristina & Trucchi, Serena, 2016. "Liquidity constraints and labor supply," European Economic Review, Elsevier, vol. 87(C), pages 176-193.
    7. Andrew Benito & Jumana Saleheen, 2013. "Labour Supply as a Buffer: Evidence from UK Households," Economica, London School of Economics and Political Science, vol. 80(320), pages 698-720, October.
    8. Bryan, Mark L. & Longhi, Simonetta, 2013. "Couples' Labour Supply Responses to Job Loss: Boom and Recession Compared," IZA Discussion Papers 7775, Institute of Labor Economics (IZA).
    9. van Huizen, Thomas, 2014. "More wealth, shorter hours? Evidence from the Netherlands," Economics Letters, Elsevier, vol. 125(2), pages 323-326.
    10. Massimo Baldini & Costanza Torricelli & Maria Cesira Urzì Brancati, 2018. "Family ties: Labor supply responses to cope with a household employment shock," Review of Economics of the Household, Springer, vol. 16(3), pages 809-832, September.
    11. Bunn, Philip & Chadha, Jagjit & Lazarowicz, Thomas & Millard, Stephen & Rockall, Emma, 2021. "Household debt and labour supply," Bank of England working papers 941, Bank of England.

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    More about this item

    Keywords

    self-insurance; labour supply;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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