The “uncertainty trap”: Does greater uncertainty about future economic outlooks, faced by already socio-economically vulnerable individuals, reinforce inequalities?

Data shows that, all else being equal in terms of socio-economic status, the poorest households are more uncertain, both regarding their future incomes and expected economic outlook. Therefore, disadvantaged individuals might suffer more from the consequences of suboptimal economic decisions that stem from greater uncertainty: even lower incomes, excessive saving, distortions in the allocation of their work time, or a lower propensity for riskier investments or entrepreneurship, to name a few. This raises the following question: does uncertainty reinforce economic inequalities? Is uncertainty a "poverty trap"? This project aims at precisely addressing these questions, focusing on a crucial aspect of household economic uncertainty: the subjective perception of the risk of job loss.