Unemployment and Consumption: Are Job Losses Less Painful Near the Mediterranean?
CEMFI Working Paper No. 0010
Posted: 6 Jun 2001
Date Written: September 2000
In this paper we analyze the relationship between unemployment and consumption. We study this relationship with panel data on households in five countries: Spain, Italy, Germany, Britain, and the US. Our empirical results indicate that an increase in the duration of unemployment spells of male household heads is associated with smaller consumption losses in Spanish and Italian households. We discuss this finding in the light of different market and institutional frameworks. The evidence supports the hypothesis that extended family networks, which appear to be stronger near the Mediterranean, provide a fundamental source of insurance against unemployment in southern Europe.
Keywords: Consumption, Savings, Unemployment
JEL Classification: E21, E24
Suggested Citation: Suggested Citation