Consumption and time use responses to unemployment: Implications for the lifecycle model

Abstract

In this study, we analyse the effects of unemployment on consumption and time use. To do so, we employ a micro panel dataset for the Netherlands containing a large set of expenditure and time use categories. Our results show a small negative effect of unemployment on expenditures, and large positive effects on time spent on home production and leisure activities. We do not find evidence for complementarity between leisure and consumption or for substitution between home production and expenditures. We use our results to estimate a ratio of relevant lifecycle parameters, and show that the point estimates and their precision depend strongly on the expenditure and time use categories considered.