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dc.contributor.authorJuelsrud, Ragnar E.
dc.contributor.authorGetz Wold, Ella
dc.date.accessioned2024-04-04T15:32:11Z
dc.date.available2024-04-04T15:32:11Z
dc.date.issued2023
dc.identifier.issn2704-1980
dc.identifier.urihttps://hdl.handle.net/11250/3124935
dc.description.abstractIn this paper we use a novel natural experiment and Norwegian tax data to quantify the causal impact of unemployment risk on individual savings. We show theoretically that higher unemployment risk increases liquid savings and has an ambiguous impact on illiquid savings in partial equilibrium. In line with the model predictions, our empirical results confirm that a one percentage point increase in unemployment rates increases liquid savings by 1.3 percent in the cross-section. Reassuringly, this effect is driven by low-tenured workers, who face the highest increase in risk. Illiquid savings remain unaffected, implying an increase in the overall liquidity of individual saving portfolios. Using two independent approaches to quantify the overall importance of the unemployment risk channel in explaining saving dynamics during recessions, we find that at least 80% of the recession-induced increase in liquid savings can be explained by higher unemployment risk.en_US
dc.language.isoengen_US
dc.publisherBI Norwegian Business Schoolen_US
dc.relation.ispartofseriesHOFIMAR Working Paper Series;6/2023
dc.subjectUnemployment risken_US
dc.subjectPrecautionary savingsen_US
dc.subjectPortfolio allocationen_US
dc.subjectHousehold financeen_US
dc.subjectRegressionsen_US
dc.subjectUncertaintyen_US
dc.titleThe importance of unemployment risk for individual savingsen_US
dc.typeWorking paperen_US
dc.source.pagenumber58en_US


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