Job Loss, Credit Constraints and Consumption Growth

Arbeitspapier

We use direct evidence on credit constraints to study their importance for household consumption growth and for welfare. We distentangle the direct effect on consumption growth of a currently binding credit constraints from the indirect effect of a potentially binding credit constraint which generates consumption risk. Our data is focused on job losers. We find that less than 5% of job losers experience a binding credit constraint, but for those that do, they experience significant welfare losses, and consumption growth is 24% higher than for the rest of the population. However, even among those who are currently unconstrained and who are able to borrow if needed, consumption responds to transitory income.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1126

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: Job Loss ; Credit Constraints ; Consumption ; Arbeitslosigkeit ; Kreditrationierung ; Haushaltseinkommen ; Konsumentenverhalten ; Privater Haushalt ; Kanada

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Crossley, Thomas F. ; Low, Hamish W.
• Event: Veröffentlichung
• (who): Koç University-TÜSİAD Economic Research Forum (ERF)
• (where): Istanbul
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/108568
• Last update: 10.03.2025, 11:42 AM CET