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Job loss expectations, durable consumption and household finances: Evidence from linked survey data

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  • Pettinicchi, Yuri
  • Vellekoop, Nathanael

Abstract

Job security is important for durable consumption and household savings. Using surveys, workers express a probability that they will lose their job in the next 12 months. In order to assess the empirical content of these probabilities, we link survey data to administrative data with labor market outcomes. Workers predict job loss quite well, in particular those whose job loss is followed by unemployment. Workers with higher job loss expectations acquire cheaper cars, and are less likely to buy new cars. In line with models of precautionary saving, higher job loss expectations are associated with more savings and less exposure to risky assets.

Suggested Citation

  • Pettinicchi, Yuri & Vellekoop, Nathanael, 2019. "Job loss expectations, durable consumption and household finances: Evidence from linked survey data," SAFE Working Paper Series 249, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewp:249
    DOI: 10.2139/ssrn.3365473
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    References listed on IDEAS

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    Cited by:

    1. Jason M. Lindo & Krishna Regmi & Isaac Swensen, 2020. "Stable Income, Stable Family," NBER Working Papers 27753, National Bureau of Economic Research, Inc.
    2. Pahontu, Raluca L., 2022. "Divisive jobs: three facets of risk, precarity, and redistribution," LSE Research Online Documents on Economics 111593, London School of Economics and Political Science, LSE Library.
    3. Ragnar Enger Juelsrud & Ella Getz Wold, 2023. "The importance of unemployment risk for individual savings," Working Papers 06/2023, Centre for Household Finance and Macroeconomic Research (HOFIMAR), BI Norwegian Business School.
    4. Makridis, Christos A., 2022. "The social transmission of economic sentiment on consumption," European Economic Review, Elsevier, vol. 148(C).

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    More about this item

    Keywords

    Subjective expectations; Durable consumption; Household saving;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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