Labour supply as a buffer: evidence from UK households
This paper examines how individuals use their labour supply—hours of work and participation decisions—as a margin of adjustment or ‘buffer’ in response to financial shocks. The financial shock measure is constructed using individuals' expected change to their financial situation in the year ahead relative to the perceived outcome one year later. Using BHPS data, we find that both men and women adjust their labour supply in response to financial shocks. The propensity to participate in the labour market also appears to respond to the experience of a financial shock, but is less robust.
Volume and page numbers
80 , 698 -720
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