Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/37358
Authors: 
Fossen, Frank M.
Rostam-Afschar, Davud
Year of Publication: 
2010
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Income Risk, Savings and Intergenerational Links A14-V2
Abstract: 
Various studies have interpreted a positive correlation between income risk and wealth as evidence for large precautionary savings. However, the high 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. They may rather save for old age, as they are usually not covered by statutory pension insurance. The analysis accounts for endogeneity of entrepreneurial choice and heterogeneous risk attitudes.
Subjects: 
precautionary saving
precautionary wealth
entrepreneurship
risk aversion
JEL: 
D91
D12
E21
Document Type: 
Conference Paper

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