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dc.contributor.authorHurst, Eriken_US
dc.contributor.authorKennickell, Arthuren_US
dc.contributor.authorLusardi, Annamariaen_US
dc.contributor.authorTorralba, Franciscoen_US
dc.date.accessioned2006-08-08en_US
dc.date.accessioned2009-07-24T13:47:57Z-
dc.date.available2009-07-24T13:47:57Z-
dc.date.issued2006en_US
dc.identifier.piurn:nbn:de:hebis:30-29443-
dc.identifier.urihttp://hdl.handle.net/10419/25482-
dc.description.abstractIn this paper, we show the pivotal role business owners play in estimating the importance of the precautionary saving motive. The fact that business owners hold higher-than-average wealth while facing higher income risk than other households leads to a correlation between wealth and labor income risk regardless of whether or not a precautionary motive is important. Using data from the Panel Study of Income Dynamics in the 1980s and the 1990s, we show that within separate samples of both business owners and non-business owners the size of precautionary savings with respect to labor income risk is modest and accounts for less than ten percent of total household wealth. However, pooling together these two groups leads to an artificially high estimate of the importance of precautionary savings. Data from the Survey of Consumer Finances further confirms that precautionary savings account for less than ten percent of total wealth for both business owners and non-business owners. Thus, while a precautionary saving motive exists and affects all households, it does not give rise to high amounts of wealth in the economy, particularly among those households who face the most volatile labor earnings.en_US
dc.language.isoengen_US
dc.publisherCenter for Financial Studies Frankfurt, Mainen_US
dc.relation.ispartofseriesCFS Working Paper 2006/16en_US
dc.subject.jelD91en_US
dc.subject.ddc330en_US
dc.subject.keywordIncome Risken_US
dc.subject.keywordHousehold Wealthen_US
dc.subject.keywordEntrepreneurshipen_US
dc.subject.stwSparenen_US
dc.subject.stwKassenhaltungsansatzen_US
dc.subject.stwUnternehmeren_US
dc.subject.stwUSAen_US
dc.titlePrecautionary savings and the importance of business ownersen_US
dc.typeWorking Paperen_US
dc.identifier.ppn515354295en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
dc.identifier.repecRePEc:zbw:cfswop:200616-
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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