Household Debt and Financial Assets: Evidence from Great Britain, Germany and the United States

We explore the determinants of debt and financial asset accumulation at the household level using survey data for Great Britain, Germany and the United States (US). Given that debt and assets are both components of a household’s financial portfolio, we explore the degree of inter-dependence between households’ assets and liabilities by jointly modelling these two aspects of the portfolio. Indeed, our empirical findings for both countries support a high degree of inter-dependence between debt and asset holding. Furthermore, the nature of this inter-dependence varies across income ranges and age groups with the weakest correlation between financial assets and debt being found for the lowest income groups in Great Britain, suggesting that such groups may be particularly vulnerable to adverse financial shocks. Evidence supporting inter-dependence between assets and debt no longer remains, however, once we focus on debtors which suggests that households in debt may potentially face difficulties following adverse changes in their financial situation.Debt; Financial Assets; Household Financial Portfolio; Random Effects; Tobit Estimator

Business Cycles and the Role of Confidence: Evidence from Europe

Using an under-utilised dataset on consumer and business confidence indicators across the UK, France, Italy and the Netherlands, this paper considers the extent to which such indicators are linked to GDP and the business cycle. We adopt, cross correlation descriptive statistics, Granger causality tests, variance decomposition, and forecast probit tests to investigate the properties of the data. In general consumer and business confidence indicators are leading indicators and pro-cyclical. There is some evidence of causality between the indicators and GDP and confidence indicators would appear to have good predictive power of cycle turning points in relation to other leading indicators.

Spillovers from FDI and Skill Structures of Host-Country Firms

This paper uses panel data across UK manufacturing from 1983 to 1992, to test whether inward flows of FDI have contributed to increasing trends in the employment of relatively higher skilled individuals. Moreover, the paper isolates the effect on domestic firms, and shows that this effect is a function of the size of the foreign productivity advantage. The results show, that even after controlling for the factors most commonly used to explain relative employment shifts – namely technological change and import intensity, that FDI has a role to play in influencing employment trends.multinationals; spillovers; relative employment

Religion and Education: Evidence from the National Child Development Study

In this paper, we explore the determinants of one aspect of religious behaviour – church attendance – at the individual level using British data derived from the National Child Development Study (NCDS). To be specific, we focus on the relationship between education and church attendance, which has attracted some attention in the existing literature. In contrast to the previous literature in this area, our data allows us to explore the dynamic dimension to religious activity since the NCDS provides information on church attendance at three stages of an individual’s life cycle. The findings from our cross-section and panel data analysis, which treats education as an endogenous variable, support a positive association between education and church attendance. In addition, our findings suggest that current participation in religious activities is positively associated with past religious activities. Furthermore, our findings suggest that levels of religious activity tend to vary less over time suggesting that factors such as habit formation may be important.Church Attendance; Education; Human Capital; Religion.

Reservation Wages, Expected Wages and the Duration of Unemployment: Evidence from British Panel Data

In this paper we analyse the role of wage expectations in an empirical model of incomplete spells of unemployment and reservation wages. To be specific, we model the duration of unemployment, reservation wages and expected wages simultaneously for a sample of individuals who are not in work, where wage expectations are identified via an exogenous policy shock based upon the introduction of Working Family Tax Credits (WFTC) in the UK. The results from the empirical analysis, which is based on the British Household Panel Survey, suggest that WFTC eligibility served to increase expected wages and that expected wages are positively associated with reservation wages. In addition, incorporating wage expectations into the econometric framework was found to influence the magnitude of the key elasticities: namely the elasticity of unemployment duration with respect to the reservation wage and the elasticity of the reservation wage with respect to unemployment duration.unemployment duration, reservation wages, expected wages

The Saving Behaviour of Children: Analysis of British Panel Data

We explore the influences on the saving behaviour of children aged 11 to 15 using panel data drawn from the British Household Panel Survey Youth Questionnaire. Our empirical findings suggest that parental allowances/pocket money exert a moderating influence on the probability that a child will save, whilst hours of paid work undertaken by the child are positively associated with the probability that a child will save. The saving behaviour of parents, however, does not appear to influence the saving behaviour of their offspring. In contrast, financial optimism on the part of parents does appear to lower the probability that their children will save. In addition, our empirical analysis reveals some interesting differences relating to the determinants of the saving behaviour of boys and girls as well as evidence of state dependence in the saving behaviour of children.household finances, intergenerational analysis, panel data, saving

On Modelling the Social Interaction of Couples

In this paper we contribute to the existing microeconomic literature on social interaction, which has generally focused on social interaction from an individual’s perspective. Given that decisions regarding social interaction are often made within the context of a couple or family, we explore the potential interdependence between the social interaction of husbands and wives from both a theoretical and an empirical perspective. We develop a theoretical framework based on an extension of Becker (1974) to include factors which characterise aspects of a couple’s decision-making in relation to social interaction and show that these factors support a tendency towards a positive correlation between the husband’s and wife’s levels of social interaction. Indeed, our empirical findings suggest such a positive association between the social interaction of husbands and wives as measured by active club membership and the frequency of the social interaction activities. In addition, we find that this positive association is particularly pronounced across the same types of club membership or social activities.Couples; Panel Data; Social Interaction