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Title:Precautionary and entrepreneurial saving: new evidence from German households PDF Logo
Authors:Fossen, Frank M.
Rostam-Afschar, Davud
Issue Date:2009
Series/Report no.:Discussion papers // German Institute for Economic Research 920
Abstract:The well-documented positive correlation between income risk and wealth was interpreted as evidence for high amounts of precautionary wealth in various studies. However, the large estimates emerged from pooling non-entrepreneurs and entrepreneurs without controlling for heterogeneity. This paper provides evidence for Germany based on representative panel data including private wealth balance sheets. Entrepreneurs, who face high income risk, hold more wealth than employees, but it is shown that this is not due to precautionary motives. Entrepreneurs may rather save for old age, as they are usually not covered by statutory pension insurance. The analysis accounts for endogeneity of entrepreneurial choice.
Subjects:Precautionary saving
precautionary wealth
entrepreneurship
JEL:D91
D12
E21
Document Type:Working Paper
Appears in Collections:DIW-Diskussionspapiere
Publikationen von Forscherinnen und Forschern des DIW

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