Job insecurity and financial distress

This article investigates the effects of different job categories on households’ likelihood of experiencing financial distress. Given imperfect financial markets and the absence of unemployment subsidies, households with less secure jobs are likely to experience drops in income more frequently than households with well-protected jobs. Households’ abilities to deal with financial decisions (i.e. financial literacy) can mitigate these problems. Our results suggest that – with respect to stable workers – greater job uncertainty for insecure workers increases the probability of being in financial distress similarly to other working statuses (e.g. unemployment), and in some cases even more (i.e. part-time workers). However, a high level of financial literacy can counterbalance this effect, especially for atypical workers.