Losses in the great recession: Dutch households under fire

  • Matthijs Triep Matthijs Triep

This thesis attempts to quantify relative lifetime consumption expenditure losses of five Dutch household cohorts of different birth years in the Great Recession. Using a calibrated partial equilibrium model, where households are subjected to age-specific labour income shocks and general asset (wealth) shocks, recession scenarios and a normal economy benchmark are simulated and compared. As our five birth cohorts (selection is based on their age in the pre-recession year 2007) feature different expected wage paths, wealth balances and remaining life spans, distinct dynamics drive their economic performance. Our results show the oldest cohort, 65+ in 2007, to be robustly off the worst in a temporary recession of ten years, while the youngest cohort, younger than 35, comes in second. Intermediate cohorts suffer the least losses in various scenarios. For a permanent recession we find the youngest cohort to have the largest relative consumption losses. The oldest households in this case are harmed the least.

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