Labour Supply Responses to Financial Wealth Shocks: Evidence from in Italy

37 Pages Posted: 20 Mar 2019

See all articles by Renata Bottazzi

Renata Bottazzi

University of Bologna

Serena Trucchi

Ca Foscari University of Venice

Matthew Wakefield

University of Bologna

Date Written: March 16, 2019

Abstract

We look at how strongly shocks to wealth affect labour supply, using Italian data. We use asset price shocks to provide a measure of wealth changes that is exogenous to the household’s saving and labour supply. Results point to significant effects of wealth on: hours of work; whether agents leave their jobs; and, labour earnings. The magnitude of these effects can be substantial, for example for individuals who suffered larger wealth losses during the financial crisis. Responses are similar for men and women on average, but older working‐age individuals have relatively strong responses that drive the population results. Short‐run effects are somewhat persistent.

Keywords: Labour Supply, Financial wealth shocks, Wealth effects

JEL Classification: D15, J22

Suggested Citation

Bottazzi, Renata and Trucchi, Serena and Wakefield, Matthew, Labour Supply Responses to Financial Wealth Shocks: Evidence from in Italy (March 16, 2019). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 10/WP/2019 , Available at SSRN: https://ssrn.com/abstract=3355250 or http://dx.doi.org/10.2139/ssrn.3355250

Renata Bottazzi

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Serena Trucchi (Contact Author)

Ca Foscari University of Venice

Dorsoduro 3246
Venice, Veneto 30123
Italy

Matthew Wakefield

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

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