Do Credit Supply and Unemployment Risk Matter for Household Saving? Evidence from Poland

This paper contributes to the literature on the effects of uncertainty on household saving – a long-standing and extensively explored topic yet leaving a number of issues inconclusive. It concentrates on the labor income uncertainty by addressing saving against unemployment risk in terms of changes in credit supply and households’ financial wealth. Time series analysis uses dataset of quarterly observations from 2003 Q4 to 2019 Q3 for Poland. It provides empirical evidence of the negative relationship of changes in households’ financial wealth and credit availability with the household propensity to save, in line with the buffer saving model. Furthermore, it contributes to the discussion on the choice of uncertainty measures referring to the labor market with a recommendation to employ the subjective (perceived) unemployment expectation index rather than the objective unemployment rate. These results are meaningful for policy implications. They emphasize the role of credit availability for household consumption/saving decisions. In case of expansionary monetary policy and making credit easier to acquire for households, all other things equal, a negative effect on the household saving rate may be expected. This poses a question about the risk of households’ overreliance on credit and therefore about their financial stability in emergency situations.

COVID-19 vaccination and unemployment risk: lessons from the Italian crisis

This paper analyzes the impact of mobility contraction on employee furlough and excess deaths in Italy during the COVID-19 crisis. Our approach exploits rainfall patterns across Italian administrative regions as a source of exogenous variation in human mobility to pinpoint the causal effect of mobility restrictions on excess deaths and furlough workers. Results confirm that the first countrywide lockdown has effectively curtailed the COVID-19 epidemics restricting it mainly to the northern part of the country, with the drawback of a countrywide increase in unemployment risk. Our analysis points out that a mobility contraction of 1% leads to a mortality reduction of 0.6%, but it induces an increase of 10% in Wage Guarantee Funds allowed hours. We discuss return-to-work policies and prioritizing policies for administering COVID-19 vaccines in the most advanced stage of a vaccination campaign when the healthy active population is left to be vaccinated.

IMPACT OF DIFFERENT LIFE-CYCLE SAVING STRATEGIES AND UNEMPLOYMENT ON INDIVIDUAL SAVINGS IN DEFINED CONTRIBUTION PENSION SCHEME IN SLOVAKIA

Searching for the optimal saving strategy is often tied with the life-cycle strategies where only the age of a saver is considered for setting the allocation profile between equities and bonds. Our article contributes to the debate by looking at the performance and adequacy risks arising from applying age-based saving strategies for savers in funded pension schemes. As many studies have proven the shift of the risk onto savers in defined contribution pension schemes under various saving strategies, we contribute to the debate by providing simulations of expected accumulated savings via funded pension scheme under the various life-cycle income profiles and existence of unemployment risk. Using the resampling simulation technique, we compare the fixed and age-based strategies of three different agents with various life-cycle income paths and different unemployment risk. We compare the expected amount of savings and calculate relative indicators comparing the expected monthly benefits, income replacement rate. We look closely on the impact of unemployment on the value of savings and calculate the unemployment factor explaining the value of savings lost due to the periods of unemployment. By combining life-cycle income functions of individuals with different education level and unemployment risk, we show that decisions of implementing low risk saving strategies are suboptimal and lead to a substantial decrease in replacement ratios not only for higher income cohorts but especially for the lowest ones. At the same time, we prove that employing low risk saving strategy leads to the increase of adequacy risk especially driven by the unemployment risk that is higher for lower education individuals. We conclude that age-based life-cycle saving strategies, where the remaining saving horizon is the only factor defining the allocation profile is not the optimal saving strategy and other factors should be considered as well when searching for optimal saving strategy.

Economic Distress and Support for Radical Right Parties—Evidence From Sweden

This paper studies the effects of economic distress on support for radical right parties. Using Swedish election data, I show that one layoff notice among low-skilled native-born workers increases, on average, support for the Swedish radical right party the Sweden Democrats by 0.17–0.45 votes. The relationship between layoff notices and support for the Sweden Democrats is stronger in areas with a high share of low-skilled immigrants and in areas with a low share of high-skilled immigrants. These findings are in line with theories suggesting that economically distressed voters oppose immigration as they fear increased labor market competition. In addition, I use individual-level survey data to show that self-reported unemployment risk is positively associated with voting for the Sweden Democrats among low-skilled respondents while the opposite is true for high-skilled respondents, echoing the aggregate-level findings.

Economic Risk within the Household and Voting for the Radical Right

ABSTRACT This article investigates how unemployment risk within households affects voting for the radical right. The authors contribute to recent advances in the literature that have highlighted the role of economic threat for understanding the support of radical-right parties. In contrast to existing work, the authors do not treat voters as atomistic individuals; they instead investigate households as a crucial site of preference formation. Combining largescale labor market data with comparative survey data, they confirm the expectations of their theoretical framework by demonstrating that the effect of occupational unemployment risk on radical-right support is strongly conditioned by household-risk constellations. Voting for the radical right is a function not only of a voter’s own risk, but also of his or her partner’s risk. The article provides additional evidence on the extent to which these effects are gendered and on the mechanisms that link household risk and party choice. The results imply that much of the existing literature on individual risk exposure potentially underestimates its effect on political behavior due to the neglect of multiplier effects within households.

The structure of unemployment risk perception among migrant workers in China: An exploratory mixed methods study

China has 287 million migrant workers and identifying and preventing their unemployment risk holds theoretical and practical significance. This study collected data in 2019 to explore the structure of migrant workers’ perception of unemployment risk. In the first stage of this study, in-depth interviews and grounded theory analysis were conducted and an interpretation framework for migrant workers’ unemployment risk perception (URP) was developed. In the second stage, a URP scale for migrant workers was developed and then tested and verified using a questionnaire survey and factor analysis. The results showed that the URP of migrant workers is composed of many dimensions: mental, financial, relationship, citizenization and re-migration.

Risk-Based Selection in Unemployment Insurance: Evidence and Implications

This paper studies whether adverse selection can rationalize a universal mandate for unemployment insurance (UI). Building on a unique feature of the unemployment policy in Sweden, where workers can opt for supplemental UI coverage above a minimum mandate, we provide the first direct evidence for adverse selection in UI and derive its implications for UI design. We find that the unemployment risk is more than twice as high for workers who buy supplemental coverage. Exploiting variation in risk and prices, we show how 25–30 percent of this correlation is driven by risk-based selection, with the remainder driven by moral hazard. Due to the moral hazard and despite the adverse selection we find that mandating the supplemental coverage to individuals with low willingness-to-pay would be suboptimal. We show under which conditions a design leaving choice to workers would dominate a UI system with a single mandate. In this design, using a subsidy for supplemental coverage is optimal and complementary to the use of a minimum mandate. (JEL D82, G22, J65)