Abstract
For nearly 6 million young Malaysian in the labour force, Covid-19 will be especially damaging. They face the highest risk of unemployment. Their job opportunities will be severely curtailed by the contraction of the job market and with their comparatively lower incomes, many will struggle to feed their families. This study explores the conceptual framework on the impact of income shock on consumption spending among young household with debts. In this setting, the framework outlined the possible critical factors for suitable policy-formulation during Covid-19 for the government in sustaining the country’s economic stability.
Highlights
During Covid-19, the Malaysian Institute of Economic Research, in a press statement on 24March 2020, predicts that the real GDP growth of Malaysia in 2020 will drop from 4.0% to -2.9%, with up to 2.4 million job losses, of which 67% will be from the unskilled workers category
Motivated by the scenario discussed above, this paper explores the conceptual framework of income shocks on consumption related to young household indebtedness
The novelty of this study is to extend the household income-consumption nexus based on famous Ando and Modigliani’s (1963) life cycle model and Friedman’s (1957) permanent income hypothesis augmented with level of indebtedness in focusing on socio-demographic
Summary
Countries such as Thailand and Malaysia have recorded the highest household debt among the Asian countries This raised the question as how the vulnerable household will react to income shocks such as job loss and the effect on consumption-related to high indebtedness level. Motivated by the scenario discussed above, this paper explores the conceptual framework of income shocks on consumption related to young household indebtedness. For Malaysia’s nearly 6 million young people in the labour force, Covid-19 will be especially damaging (Welsh and Cheng, 2020) They face the highest risk of unemployment and their job opportunities will be severely curtailed by the contraction of the job market, and with their comparatively lower incomes, many will struggle to feed their families. The objective of this study is to explore the conceptual framework of income shocks on consumption related to young household indebtedness. The paper proceeds in the following ways: Section 2 briefly reviews previous studies on the related theories; Section 3 describes the conceptual framework and hypothesis; and Section 4 concludes the study
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: International Journal of Academic Research in Business and Social Sciences
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
