Labour Supply as a Buffer: Evidence from UK Households

23 Pages Posted: 30 Sep 2013

See all articles by Andrew Benito

Andrew Benito

Bank of England - Domestic Finance Division

Jumana Saleheen

Bank of England

Multiple version iconThere are 3 versions of this paper

Date Written: October 2013

Abstract

This paper examines how individuals use their labour supply - hours of work and participation decisions - as a margin of adjustment or ‘buffer’ in response to financial shocks. The financial shock measure is constructed using individuals' expected change to their financial situation in the year ahead relative to the perceived outcome one year later. Using BHPS data, we find that both men and women adjust their labour supply in response to financial shocks. The propensity to participate in the labour market also appears to respond to the experience of a financial shock, but is less robust.

Suggested Citation

Benito, Andrew and Saleheen, Jumana, Labour Supply as a Buffer: Evidence from UK Households (October 2013). Economica, Vol. 80, Issue 320, pp. 698-720, 2013, Available at SSRN: https://ssrn.com/abstract=2332921 or http://dx.doi.org/10.1111/ecca.12030

Andrew Benito

Bank of England - Domestic Finance Division ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom
020 7601 5212 (Phone)

Jumana Saleheen

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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