Estimating the Effects of Earnings Uncertainty on Families's Saving and Insurance Decisions
AbstractThis paper investigates whether families save partially to self-insure against uncertain future earnings and estimates the extent to which pooled insurance substitutes for saving as a precaution against earnings risk. An econometric model is estimated using unique household survey data from the nineteenth century to examine families' joint saving and insurance decisions. The historical micro-data is of interest because it predates widespread social insurance programs, which may stunt self-insurance through private saving among contemporary families. The econometric results imply that two independent measures of idiosyncratic earnings risk matter for families' saving decisions. Additionally, families whose primary wage earners belong to labor unions significantly save less frequently than others, all else being equal, but this tendency is not apparent among members of private benevolent societies.
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Bibliographic InfoPaper provided by Houston - Department of Economics in its series Papers with number 98-07.
Length: 25 pages
Date of creation: 1998
Date of revision:
Contact details of provider:
Postal: UNIVERSITY OF HOUSTON, DEPARTMENT OF ECONOMICS, COLLEGE OF SOCIAL SCIENCES, HOUSTON TEXAS 77023 U.S.A.
Web page: http://www.class.uh.edu/econ/
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CONSUMPTION ; SAVINGS ; INCOME;
Find related papers by JEL classification:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
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- Michael G. Palumbo & John A. James & Mark Thomas, 1999.
"Consumption smoothing among working-class American families before social insurance,"
Finance and Economics Discussion Series
1999-24, Board of Governors of the Federal Reserve System (U.S.).
- John A. James & Michael G. Palumbo & Mark Thomas, 2007. "Consumption smoothing among working-class American families before social insurance," Oxford Economic Papers, Oxford University Press, vol. 59(4), pages 606-640, October.
- James, J.A. & Palumbo, M.G. & Thomas, M., 1998. "Consumption Smoothing Among Working-Class American Families Before Social Insurance," Papers 98-05, Houston - Department of Economics.
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