Academic journal article Monthly Labor Review

Job Loss Expectations and Consumption. (Precis)

Academic journal article Monthly Labor Review

Job Loss Expectations and Consumption. (Precis)

Article excerpt

In a recent study, Melvin Stephens, Jr. of Carnegie Mellon University examined the degree to which individuals' expectations regarding future job loss affect household consumption. As part of the study, he also measured the accuracy of those expectations.

Stephens describes his research in "Job Loss Expectations, Realizations, and Household Consumption Behavior" (National Bureau of Economic Research Working Paper 9508). The data for his analysis come from the Health and Retirement Study (HRS), which started in 1992 with a sample of households containing at least one person born between 1931 and 1941. The survey reinterviews the households every 2 years, and gathers a variety of information, including information on employment. Stephens's analysis was restricted to men; totally, 2,643 men were in his sample, of whom 386 were displaced during the study period.

The results indicated that subjective job loss expectations do have predictive power with regard to future job loss. This is supported in a number of ways, including that nondisplaced workers on average had earlier reported a probability of job loss during the next year of 13. …

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