Job Loss Expectations, Durable Consumption and Household Finances: Evidence from Linked Survey Data

25 Pages Posted: 4 Apr 2019

See all articles by Yuri Pettinicchi

Yuri Pettinicchi

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

Nathanael Vellekoop

University of Toronto; Goethe University Frankfurt - Research Center SAFE; Netspar

Date Written: March 2019

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.

Keywords: Subjective expectations; Durable consumption; Household saving

JEL Classification: C81, C83, D14, J63

Suggested Citation

Pettinicchi, Yuri and Vellekoop, Nathanael, Job Loss Expectations, Durable Consumption and Household Finances: Evidence from Linked Survey Data (March 2019). SAFE Working Paper No. 249. Available at SSRN: https://ssrn.com/abstract=3365473 or http://dx.doi.org/10.2139/ssrn.3365473

Yuri Pettinicchi

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany
+49-89-38602-301 (Phone)

Nathanael Vellekoop (Contact Author)

University of Toronto ( email )

Max Gluskin House
150 St George st
Toronto, Ontario M5S 3G7
Canada

HOME PAGE: http://www.nvellekoop.nl

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.nvellekoop.nl

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