The wealth of the unemployed

Many studies have investigated the adequacy of unemployment insurance (UI) benefits as a form of income replacement, but few have looked at other reso urces with which the unemployed can finance their unemployment spells. This paper focuses on one form of resources, own wealth holdings. The author fi nds that the median worker's financial assets can cover roughly two-thirds of the income loss from an unemployment spell, Wealth holdings vary tremend ously, however, and almost one-third of workers are unable to replace even 10% of their income loss. Moreover, predicted wealth holdings decline preci pitously with realized unemployment durations, both absolutely and (especia lly) relative to actual income loss. This finding, together with the findin g that individuals who are eligible for more generous UI draw down their we alth more Slowly than do others during unemployment spells, suggests that U I benefit adequacy could be increased if the benefits were targeted to thos e with longer unemployment spells.