Jonas Kolsrud


PhD, economist and researcher, National Institute of Economic Research, Stockholm, and Swedish Institute of Social Research (SOFI), Stockholm University
Phone: +46 - 8 - 453 59 35
Email: jonas.kolsrud[at]konj.se / jonas[at]kolsrud.se / jonas.kolsrud[at]sofi.su.se

My primary research interests are consumption and saving and how the two are affected by public social insurance programs. I am also doing work on unemployment insurance, job search and subsidized jobs programs.




Publications


The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden (2018),

American Economic Review, 108(4-5), 985-1033.


(with Camille Landais (LSE), Peter Nilsson (IIES) and Johannes Spinnewijn (LSE))

This paper provides a simple, yet robust framework to evaluate the time profile of benefits paid during an unemployment spell. We derive sufficient-statistics formulae capturing the marginal insurance value and incentive costs of unemployment benefits paid at different times during a spell. Our approach allows us to revisit separate arguments for inclining or declining profiles put forward in the theoretical literature and to identify welfare-improving changes in the benefit profile that account for all relevant arguments jointly. For the empirical implementation, we use administrative data on unemployment, linked to data on consumption, income and wealth in Sweden. First, we exploit duration-dependent kinks in the replacement rate and find that, if anything, the moral hazard cost of benefits is larger when paid earlier in the spell. Second, we find that the drop in consumption affecting the insurance value of benefits is large from the start of the spell, but further increases throughout the spell. In trading of insurance and incentives, our analysis suggests that the at benefit profile in Sweden has been too generous overall. However, both from the insurance and the incentives side, we find no evidence to support the recent introduction of a declining tilt in the profile.

Link to paper

Voluntary unemployment insurance as an option for non-standard work – the case of Sweden, OECD (2018)

The Swedish public social insurance system is complemented by supplementary collectively bargained occupations insurances and benefits. These additional entitlements, most importantly occupational pension schemes, are exclusively funded by employers and employees. The paper studies how well the Swedish system tackles the challenge of providing social protection to non-standard workers - mainly self-employed and gig-workers who are not covered by collective agreements - with a focus on unemployment insurance (UI). The Swedish case may be of interest for other OECD countries since parts of the UI scheme are voluntary, and voluntary UI is one option to improve the social insurance coverage of non-standard workers across the OECD.



Working Papers


Business-cycle effects on precautionary saving estimates: Evidence from Swedish administrative data (2019)
Precautionary saving behavior is a cornerstone of many structural models, yet empirical evidence is inconclusive. Estimates of the size of precautionary wealth range between 0-50% of total wealth while Euler equation regressions have estimated relative risk aversion below conventionally assumed levels. The paper shows theoretically and empirically that (i) saving is non-linear function of income or consumption growth variance, and (ii) that the relationship between saving and income or consumption variance is highly dependent on the business cycle. Accounting for non-linearities and removing business cycle effects show that linear models underestimates precautionary wealth with at least 30% and that the coefficient of relative risk aversion is estimated to 1. The paper uses Swedish registry data on income and wealth and a residual measure of consumption to estimate Euler equations. The results are robust to asset risk, habit persistence and credit constraints. A heterogeneity analysis shows that increased income risk leads to a rebalancing to less risky assets, and that groups who face higher income variance change their net worth less when income risk rises.


Link to paper

The Value of Registry Data for Consumption Analysis: An Application to Health Shocks (2019)

(with Camille Landais (LSE) and Johannes Spinnewijn (LSE))

(Accepted, Journal of Public Economics)

This paper measures consumption expenditures using registry data on income and asset holdings in Sweden. We show how a registry-based measure complements traditional survey measures of consumption and can alleviate some critical limitations. We describe the construction of our measure, which builds on prior work and exploits the identity coming from the household budget constraint between consumption expenditures and income net of savings. We demonstrate the value of the registry-based measure to study consumption responses to shocks, also relative to surveyed consumption. In our application to health shocks, we find that Swedish household experience permanent earning drops, but generous social transfers provide substantial consumption smoothing. We document important heterogeneity in consumption responses and the limited role for private means.

Link to paper

Precaution and Risk Aversion: Decomposing the Effect of Unemployment Benefits on Saving (2013)

Reduced form estimations of precautionary saving with respect to labor market risk typically do not consider that a decrease of say unemployment probability or an increase in unemployment insurance (UI) generosity affects saving not only by reducing the expected variance in earnings but also by (in some cases) raising expected earnings. This paper studies the possibility of decomposing the treatment effect of UI on asset accumulation into two parts; one part where more generous UI leads to raised expected earnings and a second part where a more generous UI reduces the expected variation in earnings. The decomposition is applied to rich Swedish register data on both financial assets and debt. UI's effect on assets is identified with a kinked policy rule in the UI scheme. First, increased UI generosity has a significant effect, both economically and statistically, on asset holdings; a one percentage point increase in UI benefits decrease net financial asset holdings by 1 percentage point. Second, decomposing the total effect UI has on asset accumulation shows that raised expected earnings increase savings while a decreased variation in earnings decrease saving. Not accounting for the effect on expected earnings on saving underestimates the impact UI has on precautionary saving by 70 percent.

Link to paper

Consumption Smoothing during Unemployment (2011)

A vast literature has investigated how unemployment insurance (UI) affects labor supply. However, the distorting effect of UI on labor supply is to a large extent determined by how well UI benefits smooth private consumption, which in turn depends on the resources available to the unemployed. To determine UI's consumption-smoothing effect, I exploit a kink in the deterministic relationship between previous earnings and unemployment benefits. The randomized assignment of benefits created by the kink allows me to identify how UI affect the use of private wealth to finance consumption during unemployment spells. Using Swedish data for 2000-2002 I find that a large share of the unemployed actually can consume at the same level as they did prior to the layoff. I also find that loans are of great importance to consumption smoothing as more than half the sample lacks buffer savings. This is further emphasized for different subpopulations. Women, couples, and older individuals hold significantly larger liquid wealth than men and young singles.

Link to paper