Chart of the Day: Income Sources after Unemployment
Today’s chart of the day comes from Sara LaLumia and Laura Kawano’s article “How Income Changes During Unemployment: Evidence from Tax Return Data” published in the Journal of Human Resources in 2017. Figure 6 of that paper shows the pattern of various sources of non-wage earnings after unemployment. Unemployment is measured here by the timing of U.I. receipt.
A couple things to note. There’s a spike in All nonwage+U.I. at t=0, the period when their sample is defined by U.I. receipt. It decreases in the next year, but is still above the pre-unemployment level. The probability that those that filed for UI in t=0 is falling in the years prior to t. The self employed are not generally eligible for U.I., so this pattern makes since. In later results in the paper LaLumia and Kawano show that there is a longer run increase in self-employment after unemployment.
There is a spike in retirement distributions at the time of unemployment. Retirement savings appear to be used as an emergency source of income. But mostly as a short-term emergency fund, the amount drops in previous years, though remains above the pre-unemployment level. SSDI does not increase at first after unemployment (it takes a while to apply for SSDI), but gradually increases.
I mostly think about fertility-based income shocks, rather than unemployment-based income shocks, but they share some similar patterns. I don’t know the extent to which women who experience a decrease in wage and salary income after childbirth fall back on these same sources of alternate income. It’s also closely related to Chloe East and David Simon’s recent paper on the safety net post-jobloss, which I wrote about previously.