Consumption Networks and Local Economic Shocks

Consumption Networks and Local Economic Shocks Consumption Networks and Local Economic Shocks Abstract: This project studies how a local economic shock transmits to firms and workers in other regions via households' consumption behavior. Two unique features allows us to do so. First, newly collected payments data covering the majority of debit card and electronic payments in Norway allows us to break down expenditure into consumption categories purchased at narrow time windows and geographic locations. Second, the collapse in the oil price in 2014 provides a local shock to labor demand, affecting some regions and occupations but not others. This combination allows us to quantify the effect of unemployment risk on the composition of consumption and the indirect effect on workers producing the most severely affected consumption goods in other local labor markets.