Advanced Search
MyIDEAS: Login to save this paper or follow this series

Family dissolution and precautionary savings: an empirical analysis

Contents:

Author Info

  • Pericoli, Filippo Maria
  • Ventura, Luigi

Abstract

The main research question of this paper is whether or not the risk of family disruption has an impact on the consumption/saving decisions of households. Although little empirical work exists in this area, often presenting indirect evidence, the theory is divided over the effect of family risk over saving and wealth accumulation. By using data from the Italian Survey on Households Income and Wealth, we build a probabilistic model to assess the probability of marital splitting, and then we insert this probability as a distinct or interacted regressor, in a statistically consistent way, into a linear model of consumption. Furthermore, we study the differential behaviour, in terms of consumption/saving choices, of couples experiencing marital splitting over the subsequent two years. The main result of our analysis is that family disruption risk generates precautionary savings, reducing current consumption. In fact, according to our estimates, on average, the risk of divorce generates an amount of additional yearly precautionary savings of around 800 euros at constant prices of the year 2000, which represents 11% of overall household savings.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/36354/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36354.

as in new window
Length:
Date of creation: May 2011
Date of revision:
Handle: RePEc:pra:mprapa:36354

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Family disruption risk; Precautionary saving; Risk sharing;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Murphy, Kevin M & Topel, Robert H, 1985. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 3(4), pages 370-79, October.
  2. Saku Aura, 2003. "Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining," Microeconomics, EconWPA 0304002, EconWPA.
  3. Kotlikoff, Laurence J & Spivak, Avia, 1981. "The Family as an Incomplete Annuities Market," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(2), pages 372-91, April.
  4. Rosenzweig, Mark R. & Stark, Oded, 1987. "Consumption Smoothing, Migration and Marriage: Evidence from Rural India," Bulletins, University of Minnesota, Economic Development Center 7515, University of Minnesota, Economic Development Center.
  5. Michael B. Devereux & Gregor W. Smith, 1991. "International Risk Sharing and Economic Growth," Working Papers, Queen's University, Department of Economics 829, Queen's University, Department of Economics.
  6. Joseph Lupton & James P. Smith, 1999. "Marriage, Assets, and Savings," Working Papers, RAND Corporation Publications Department 99-12, RAND Corporation Publications Department.
  7. Tullio Jappelli & Luigi Pistaferri, 2009. "Does Consumption Inequality Track Income Inequality in Italy?," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 229, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  8. Rosenzweig, Mark R, 1988. "Risk, Implicit Contracts and the Family in Rural Areas of Low-income Countries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 98(393), pages 1148-70, December.
  9. Becker, Gary S, 1974. "A Theory of Marriage: Part II," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(2), pages S11-S26, Part II, .
  10. Stephanie Seguino & Maria Sagrario Floro, 2003. "Does Gender have any Effect on Aggregate Saving? An empirical analysis," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(2), pages 147-166.
  11. Gonzalez, Libertad & Özcan, Berkay, 2008. "The Risk of Divorce and Household Saving Behavior," IZA Discussion Papers 3726, Institute for the Study of Labor (IZA).
  12. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
  13. Katarina Nordblom, 2004. "Cohabitation and Marriage in a Risky World," Review of Economics of the Household, Springer, Springer, vol. 2(3), pages 325-340, 04.
  14. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June.
  15. Rosenzweig, Mark R & Wolpin, Kenneth I, 1985. "Specific Experience, Household Structure, and Intergenerational Transfers: Farm Family Land and Labor Arraangements in Developing Countries," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 100(5), pages 961-87, Supp..
  16. Grossbard-Shechtman, Shoshana Amyra & Neuman, Shoshana, 1988. "Women's Labor Supply and Marital Choice," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 96(6), pages 1294-1302, December.
  17. Ralph Chami & Gregory D. Hess, 2002. "For Better or For Worse? State-Level Marital Formation and Risk Sharing," CESifo Working Paper Series 702, CESifo Group Munich.
  18. Kennickell, Arthur & Lusardi, Annamaria, 2005. "Disentangling the importance of the precautionary saving motive," CFS Working Paper Series 2006/15, Center for Financial Studies (CFS).
  19. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, Econometric Society, vol. 56(1), pages 63-90, January.
  20. Browning, M. & Bourguignon, F. & Chiappori, P.A. & Lechene, V., 1992. "Incomes and Outcomes: A structural Model of Intra-Household Allocation," DELTA Working Papers, DELTA (Ecole normale supérieure) 92-23, DELTA (Ecole normale supérieure).
  21. Andrew Benito, 2006. "Does job insecurity affect household consumption?," Oxford Economic Papers, Oxford University Press, vol. 58(1), pages 157-181, January.
  22. Rosenzweig, Mark R & Wolpin, Kenneth I, 1994. "Parental and Public Transfers to Young Women and Their Children," American Economic Review, American Economic Association, American Economic Association, vol. 84(5), pages 1195-1212, December.
  23. Grossbard-Shechtman, Shoshana Amyra, 1984. "A Theory of Allocation of Time in Markets for Labour and Marriage," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 94(376), pages 863-82, December.
  24. Luigi Ventura & Joseph G. Eisenhauer, 2005. "The Relevance of Precautionary Saving," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 6(1), pages 23-35, 02.
  25. Brighita Negrusa & Sonia Oreffice, 2011. "Sexual orientation and household financial decisions: evidence from couples in the United States," Review of Economics of the Household, Springer, Springer, vol. 9(4), pages 445-463, December.
  26. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, American Economic Association, vol. 76(3), pages 455-69, June.
  27. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, Elsevier, vol. 39(3), pages 347-366, November.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Divorce risk is good for the savings rate
    by Economic Logician in Economic Logic on 2012-02-23 15:53:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Thomas Gries & Ha van Dung, 2014. "Household Savings and Productive Capital Formation in Rural Vietnam: Insurance vs. Social Network," Working Papers CIE 81, University of Paderborn, CIE Center for International Economics.
  2. Wataru Kureishi & Midori Wakabayashi, 2013. "What motivates single women to save? the case of Japan," Review of Economics of the Household, Springer, Springer, vol. 11(4), pages 681-704, December.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Economic Logic blog

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:36354. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.