by Massimo Baldini, Costanza Torricelli, Maria Cesira Urzì Brancati; CeRP WP N. 141/14
We use household panel data to explore the link between transitions of a household member (not only the wife) into the workforce and negative income shocks (unemployment and/or income support) suffered by another household member. We take the case of Italy where family ties other than spousal ones are particularly strong, and we also consider the role of household illiquidity due to housing. After accounting for standard socio-economic controls, results show significant reactions to income shocks, especially during the Great Recession. Moreover, at high levels of portfolio illiquidity, transitions are significantly more likely for households hit by a shock.
Published: October 2014