Weekly links February 26: Corner shops, a lack of consumption smoothing with unemployment, the rugby impact evaluation you were waiting for, and more…
· On VoxDev, Francois Gerard and Joana Naritomi summarize their forthcoming AER paper on Brazil’s job displacement insurance program and the lack of consumption smoothing. “Our results also show that consumption is highly sensitive to cash-on-hand, even in the context of a relevant and salient negative shock, such as the loss of a formal job. We show that this evidence is consistent with workers being ‘present-biased’, leading them to over-spend a windfall of cash and under-save for an expected drop in income. In fact, in a survey with UI applicants in São Paulo, we find that a majority of respondents would not prefer to receive all their UI benefits as a lump-sum payment upon layoff, despite the clear financial advantages.”