Labour supply responses to financial wealth shocks: evidence from Italy

We look at how strongly shocks to wealth affect labour supply, using Italian data. We use asset price shocks to provide a measure of wealth changes that is exogenous to the household's saving and labour supply. Results point to significant effects of wealth on hours of work, whether agents leav...

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Bibliographic Details
Published in:Fiscal studies 2021-06, Vol.42 (2), p.291-317
Main Authors: Bottazzi, Renata, Trucchi, Serena, Wakefield, Matthew
Format: Article
Language:English
Subjects:
Earnings
Economic crisis
financial wealth shocks
Labor supply
labour supply
Older women
Wealth
wealth effects
Work
Working hours
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Summary:We look at how strongly shocks to wealth affect labour supply, using Italian data. We use asset price shocks to provide a measure of wealth changes that is exogenous to the household's saving and labour supply. Results point to significant effects of wealth on hours of work, whether agents leave their jobs and labour earnings. The magnitude of these effects can be substantial – for example, for individuals who suffered larger wealth losses during the financial crisis. Responses are similar for men and women on average, but older working‐age individuals have relatively strong responses that drive the population results. Short‐run effects are somewhat persistent.
ISSN:0143-5671
1475-5890
DOI:10.1111/1475-5890.12254