Job Displacement Insurance and (the Lack of) Consumption-Smoothing

• 成果类型: Article
• 署名作者: Gerard, Francois; Naritomi, Joana
• 署名单位: University of London; Queen Mary University London; University of London; London School Economics & Political Science
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20190388
• 发表日期: 2021
• 页码: 899-942
• 关键词: income; liquidity; payments; BEHAVIOR; shocks; debt; hand

摘要

We study the spending profile of workers who experience both a positive transitory income shock (lump-sum severance pay) and a negative permanent income shock (layoff). Using de-identified expenditure and employment data from Brazil, we show that workers increase spending at layoff by 35 percent despite experiencing a 14 percent long-term loss. We find high sensitivity of spending to cash-on-hand across consumption categories and for several sources of variation, including predictable income drops. A model with present-biased workers can rationalize our findings, and highlights the importance of the timing of benefit disbursement for the consumption-smoothing gains of job displacement insurance policies.