Data and Code for: Job Displacement Insurance and (the Lack of) Consumption-Smoothing

Principal Investigator(s): View help for Principal Investigator(s) François Gerard, Queen Mary University; Joana Naritomi, London School of Economics

Version: View help for Version V1

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App Tables			11/17/2020 05:55:AM
Empirical Work			12/01/2020 02:08:PM
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Structural Model			11/17/2020 06:01:AM
Tables			11/17/2020 05:55:AM
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READ_ME.pdf	application/pdf	179.3 KB	11/13/2020 04:04:AM

Project Citation:

Gerard, François, and Naritomi, Joana. Data and Code for: Job Displacement Insurance and (the Lack of) Consumption-Smoothing. Nashville, TN: American Economic Association [publisher], 2021. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2021-02-19. https://doi.org/10.3886/E121241V1

Project Description

Summary: 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% despite experiencing a 14% 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.

Funding Sources: International Growth Centre, the National Science Foundation (NSF grant SES-1757105), and STICERD

Scope of Project

JEL Classification:
      E21 Macroeconomics: Consumption; Saving; Wealth
      E26 Informal Economy; Underground Economy
      J65 Unemployment Insurance; Severance Pay; Plant Closings

Geographic Coverage: Brazil

Time Period(s): 2010 – 2014 (Main Data Window)

Data Type(s): program source code; survey data

Methodology

Data Source:

Employment history and unemployment insurance data are from the Brazilian Ministry of Labor and Employment (MTE)
Expenditure data was created based on de-identified receipt data from an Anonymous firm
Household survey data is from the Brazilian Census Bureau (IBGE)

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Published Versions

V1 [2021-02-19]

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