Skip to content

Research Paper Bank of England Working Paper Series 426

Labour supply as a buffer: evidence from UK households

Authors

Publication date

May 2011

Abstract

This paper examines labour supply adjustment – both hours worked and
participation decisions. The analysis focuses on the response of each to
financial shocks, employing data from the British Household Panel
Survey. Results suggest that employees whose financial situation
deteriorates relative to what they expected, increase their labour
supply in response. That response is consistent with models of
self-insurance that incorporate labour supply flexibility. The shock
reflects several factors including financial wealth and a partner's
employment situation. The response is significantly larger for those who
change job, consistent with the importance of hours constraints within
jobs. The propensity to participate in the labour market also appears to
respond to the financial shock but that is somewhat less robust than
the hours response.

Links

http://www.bankofengland.co.uk/publications/workingpapers/wpabst10.htm - http://www.bankofengland.co.uk/publications/workingpapers/wpabst11.htm


Related publications

  1. Labour supply as a buffer: evidence from UK households

    Andrew Benito and Jumana Saleheen

#520035


Research home

Research home

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest