Papers RESEARCH

The Effect of Unemployment Rate Fluctuations on Employees’ Consumption and Spousal Labor Supply

Lena

2019-03-25 01:52

Zhao Da,Shen Huangnan, Zhang Jun
China Industrial Economics

Abstract: Based on Chinas monthly urban household survey UHSfrom 2010 to 2012this paper empirically tests the effect of unemployment rate fluctuation on employeesconsumption and spousal labor supply. The results show that1% increase in the grouped unemployment rate would lead to 0.48% reduction in householdsconsumption growth. That is, unemployment expectation will cause significant pre-cautionary saving. In terms of the heterogeneity of ownership structure1% increase in the grouped unemployment rate would not statistically significantly affect the consumption growth for those who work in state -ownedcollectively -owned or joint-stock firmswhereas there will be 0.5% and 1.22% reduction in consumption growth for those who have no fixed jobs or those who work in private enterprises. In terms of the heterogeneity in agesthe consumption growth for those who are near to retirement is not sensitive to the grouped unemployment rate. For those aged between 26 and 35 or aged between 36 and 50), 1% increase in the grouped unemployment rate would respectively lead to the 0.49% 0.35% reduction in consumption growth. 1% increase in the grouped unemployment rate would lead to the 8.13% probability increase in terms of spousal labor supply. Meanwhilethe single-familiesconsumptions growth rate will decrease statistically significantly by 0.69% indicating that the getting marriage could provide some sorts of self-insurance. This paper has far reaching implications to the assessment of Chinas unemployment insuranceinterpretation of the constraining factors for Chinas low consumption rate as well as the adjustment of Chinas labor market structure during business cycles.

Key Wordsunemployment rate fluctuationsconsumption responsespousal labor supply

The Chinese version appeared in China Industrial Economics, 2019(02).


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2019-03-25 09:53
27
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