The Impact of Unemployment and Re-Employment on Household Consumption Measured at High Frequency over a Six-Year Period

Published: 2016
Project ID: UM16-13


This research will extend previous work into the effects of economic shocks and unemployment on household consumption (and thus welfare). The new work will use greater sample sizes, additional years of data, and a more complete measure of spending to reveal the long-term effects of unemployment and re-employment. Using monthly data on spending levels and changes, the research will compare the spending and income trajectories of households with recently unemployed respondents with those of households where respondents continue to be employed, showing how spending changes by the duration of unemployment. It will find trajectories of income and spending following re-employment. The impact of unemployment on wealth will be estimated directly by annual wealth change and indirectly from the month-to-month difference between spending and income. These estimates will be interacted with measures of economic resources and personal characteristics to show heterogeneity in response.