Asset and Debt Accumulation: Labor Market Risk Matters
Speaker(s)Francois Fontaine (Paris School of Economics, France)
Date and time
November 09, 2020
12:00 - 13:00
Francois Fontaine is a labor economist who published in American Economic Review, Journal of International Economics, among others.
Some information and suggestions:
- If you want to attend this online seminar, you need to register here. You will then be sent by email the details of the zoom session.
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We use administrative data on individual balance sheets in Denmark to document how an individual’s financial position affects job search behavior. We look at the effect of wealth at the entry into unemployment on the exit rate from unemployment as well as the effect on the subsequent match quality. The detailed data allows us not only to distinguish between liquid and illiquid parts, but also to decompose each of them into assets and liabilities. The decomposition of wealth into these four components is key to understanding how wealth affects job finding rates. In particular, we show that liquid assets reduce the probability of becoming re-employed, but we do not see an effect of liquid liabilities or the illiquid wealth components, while interest payments speed up re-employment. The results on subsequent match quality in form of job duration and wages are mixed.