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Labour supply responses to financial wealth shocks: evidence from Italy
Author(s) -
Bottazzi Renata,
Trucchi Serena,
Wakefield Matthew
Publication year - 2021
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/1475-5890.12254
Subject(s) - economics , earnings , labour supply , asset (computer security) , financial crisis , labour economics , work (physics) , affect (linguistics) , wealth effect , population , point (geometry) , monetary economics , demographic economics , finance , macroeconomics , monetary policy , mechanical engineering , linguistics , philosophy , demography , computer security , geometry , mathematics , sociology , computer science , engineering
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.