English, Article, Journal or magazine article edition: Unemployment Insurance Benefit Levels and Consumption Changes. Martin Browning; Thomas Crossley

User activity

Share to:
 
Bookmark: http://trove.nla.gov.au/version/48614
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Unemployment Insurance Benefit Levels and Consumption Changes.
Author
  • Martin Browning
  • Thomas Crossley
Physical Description
  • preprint
Notes
  • A principal motivation for Unemployment Insurance (UI) schemes is to support consumption smoothing. The magnitude of the consumption smoothing benefits of UI depend on the extent to which households are liquidity constrained. We use a survey of unemployed people to examine how a job loss impacts on household expenditures. The principal focus is on the effect of the level of income replacement provided by UI. We restrict attention to a sub-sample of respondents who are still in their first spell of unemployment after six months. For this group we find large consumption falls, averaging about 14% of total expenditure. The actual fall depends on a variety of factors of which the most important is the pre-job loss ratio of the respondent's income to household income. These consumption falls confound the ‘permanent income’ or wealth shock of job loss, costs of working and, potentially, a liquidity constraint or ‘transitory income’ effect. The effects of varying the replacement ratio - which isolates the transitory effect - are relatively small. We only find effects for those who did not have assets at the job loss. Even for them, the elasticity of total expenditure with respect to benefit is small. We conclude that for most of our sample, small changes in the benefit level will have almost no effect on living standards within the household and hence little impact on other facets of behavior such as job search, unemployment duration and the quality of any new job taken. The data are consistent, however, with some households being liquidity constrained.
  • RePEc:mcm:cilnwp:25
  • We use a survey of unemployed people to examine how a job loss impacts on household expenditures. The principle focus is on the effect of the level of income replacement provided by Unemployment Insurance. We restrict attention to a sub-sample of respondents who are still in their first spell of unemployment after six months. For this group we find large consumption falls, averaging about 16% of total expenditure. The actual fall depends on a variety of factors of which the most important is the pre-job loss ratio of the respondent's income to hosuehold income. The effects of varying the replacement ratio are relatively small. We only find effects for those who did not have assets at the job loss and even for them the elasticity of total expenditure with respect to benefit is msall. We conclude that for most of our sample, small changes in the benefit level will have no effect on living standards within the household and hence on other facets of behavious such as job search, unemployment duration and the quality of any new job taken.
  • RePEc:mcm:deptwp:1996-01
  • We use a Canadian survey of the unemployment to examine how household expenditures after a job loss respond to the level of income replacement provided by UI.
  • UNEMPLOYMENT INSURANCE ; LIVING STANDARDS ; CONSUMPTION; Liquidity constraints
  • RePEc:auu:dpaper:405
Language
  • English
Contributed by
OAIster

Get this edition

  • Set up My libraries

    How do I set up "My libraries"?

    In order to set up a list of libraries that you have access to, you must first login or sign up. Then set up a personal list of libraries from your profile page by clicking on your user name at the top right of any screen.

  • All (1)
  • Unknown (1)
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.

User activity


e.g. test cricket, Perth (WA), "Parkes, Henry"

Separate different tags with a comma. To include a comma in your tag, surround the tag with double quotes.

Be the first to add a tag for this edition

Be the first to add this to a list

Comments and reviews

What are comments? Add a comment

No user comments or reviews for this version

Add a comment