Does job insecurity affect household consumption?
By: by Andrew Benito.
Contributors: Bank of England.
Series: Working paper,; no. 220; Working paper (Bank of England : Online) ;; no.220.
Publisher: Bank of England
Published: 2004
Place of publication: London
Language: eng
Format: Electronic resource
Subjects: Job security -- Great Britain -- Econometric models.; Households -- Economic aspects -- Great Britain -- Econometric models.; Consumption (Economics) -- Great Britain -- Econometric models.
Description: "This paper confronts implications of precautionary saving models with microdata on British households. The results provide support for the central proposition that job insecurity depresses household consumption levels. A one standard deviation increase in unemployment risk for the head of household is estimated to reduce household consumption by 2.7%. Interpreting the spread of the distribution across workers in job insecurity levels as consisting of four standard deviations, this implies that moving from the bottom to the top of the distribution gives rise to a reduction in consumption of 11%, ceteris paribus. This effect is estimated to be greater for the young, those without non-labour income and manual workers, a pattern also consistent with the predictions of precautionary saving models. The paper then studies the propensity for households to purchase durable goods and finds durables purchases to be delayed significantly by higher unemployment risk. The paper therefore demonstrates that job insecurity affects aggregate demand through both non-durable and durable expenditure, controlling for other influences including estimated permanent income"--Bank of England web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 4/13/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.