Expecting to Lose Your Job Makes You Save More
When people think their risk of unemployment is high, they change their economic behavior: they save more and are more likely to enroll in unemployment insurance. But where do these expectations come from?
New research by Ida Maria Hartmann, PhD fellow at the Center for Economic Behavior and Inequality (CEBI), University of Copenhagen, shows that perceptions of unemployment risk are not only shaped by personal experience – they are also influenced by what happens to people around us.
Expectations drive precautionary behavior
In her paper “Subjective Unemployment Expectations and (Self-)Insurance”, published in Labour Economics (2024) and co-authored with Professor Søren Leth-Petersen, Hartmann examines how people’s beliefs about job security affect financial decisions.
Individuals who expect a higher risk of unemployment are more likely to hold liquid savings and to be members of an unemployment insurance fund. The study also shows that many overestimate their risk of job loss – yet their expectations still contain valuable information about future unemployment.
When a colleague loses their job
In a new working paper, “Subjective Unemployment Expectations and Precautionary Behavior in the Shadow of Peer Job Loss” (2025), Hartmann explores where these expectations originate.
Using Danish administrative data combined with survey responses from more than 11,000 individuals, she finds that job loss within social networks, including colleagues, family members, or former classmates, appears to influence people’s perceptions of their own risk and leads them to act more cautiously.
The findings suggest that people seem to use their social networks as a source of information. When someone close loses their job, it’s interpreted as a signal that their own employment might be at risk.
A social dimension to economic resilience
Hartmann’s research suggests that unemployment is not just an individual event, but also a social signal that spreads through networks and shapes others’ expectations and behavior.
Together, the two studies offer new insight into how expectations and social information interact to shape financial resilience.
The articles are published in Labour Economics (2024) and as a CEBI working paper (August 2025).