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Title:The effect of health and employment risks on precautionary savings PDF Logo
Authors:Geyer, Johannes
Issue Date:2011
Series/Report no.:Discussion Papers, German Institute for Economic Research, DIW Berlin 1167
Abstract:This paper extends the idea of using ex-ante risk measures in a model of precautionary savings by explicitly simulating future net-income risks. The uncertainty measure takes into account the interdependency of labour market status and health. The model is estimated for prime age males using the German Socio-Economic Panel Study for years 2001-2007. The empirical analysis is conducted using a measure for saving stocks and saving flows. The latter model allows to control for individual specific effects. I find evidence for precautionary savings in response to the uncertainty measures. The results are robust and stable across specifications. There is evidence for a share of precautionary wealth of about 14 to 17 percent.
Subjects:Precautionary savings
health
employment
risks
JEL:D91
E21
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des DIW
DIW-Diskussionspapiere

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