Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142123
Authors: 
Jessen, Robin
Rostam-Afschar, Davud
Schmitz, Sebastian
Year of Publication: 
2016
Series/Report no.: 
Discussion Paper, School of Business & Economics: Economics 2016/10
Abstract: 
We quantify the importance of precautionary labor supply using data from the German Socio- Economic Panel (SOEP) for 2001-2012. We estimate dynamic labor supply equations augmented with a measure of wage risk. Our results show that married men choose about 2.5% of their hours of work or one week per year on average to shield against unpredictable wage shocks. This implies that about 26% of precautionary savings are due to precautionary labor supply. If self-employed faced the same wage risk as the median civil servant, their hours of work would reduce by 4%.
Subjects: 
wage risk
labor supply
precautionary saving
life cycle
dynamic panel data
JEL: 
D91
J22
C23
Document Type: 
Working Paper

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