Norges Bank

Working Paper

The Saving and Employment Effects of Higher Job Loss Risk

Ragnar E. Juelsrud and Ella Getz Wold
Working Paper

In this paper we use Norwegian tax data and a novel natural experiment to isolate the impact of job loss risk on saving behavior. We find that a one percentage point increase in job loss risk increases liquid savings by roughly 1.2 - 2.0 percent. Further, we show that employment falls in non-tradable industries not directly affected by the shock, also after controlling for intersectoral linkages and lower demand from affected industries, consistent with the household demand channel of recessions.

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ISSN 1502-8143 (online)

Published 3 October 2019 16:02
Published 3 October 2019 16:02