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Wage arrears uncertainty and precautionary saving in Russia

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  • Alessandra Guariglia
  • Byung-Yeon Kim

Abstract

Wage arrears are widespread in Russia, and are one of the main causes of uncertainty in the labour market. In this paper, we use the Russian Longitudinal Monitoring Survey over the period 1994-98 to construct a new and improved measure of household income risk, based on the uncertainty due to wage arrears. We then use this measure of uncertainty to test the precautionary saving hypothesis, according to which households save to self-insure against risk. We find significant evidence of additional saving by those households whose head is more likely to suffer from wage arrears one year hence. This suggests the existence of a strong precautionary saving motive. Copyright (c) The European Bank for Reconstruction and Development, 2003..

Suggested Citation

  • Alessandra Guariglia & Byung-Yeon Kim, 2003. "Wage arrears uncertainty and precautionary saving in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 493-512, September.
  • Handle: RePEc:bla:etrans:v:11:y:2003:i:3:p:493-512
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    Cited by:

    1. Yuriy Gorodnichenko & Jorge Martinez-Vazquez & Klara Sabirianova Peter, 2009. "Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 504-554, June.
    2. Delphine M. Irac & Camelia Minoiu, 2007. "Risk insurance in a transition economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15(1), pages 153-173, March.
    3. Olga Lazareva, 2012. "Born in Transition: the Effect of Economic Shocks in Early Childhood on Health and Educational Outcomes," HSE Working papers WP BRP 21/EC/2012, National Research University Higher School of Economics.
    4. repec:kap:sbusec:v:51:y:2018:i:1:d:10.1007_s11187-017-9919-x is not listed on IDEAS
    5. Linz, Susan J. & Semykina, Anastasia, 2010. "Perceptions of economic insecurity: Evidence from Russia," Economic Systems, Elsevier, vol. 34(4), pages 357-385, December.
    6. Evren Cerito─člu, 2013. "The impact of labour income risk on household saving decisions in Turkey," Review of Economics of the Household, Springer, vol. 11(1), pages 109-129, March.
    7. Notten, Geranda & Neubourg, Chris de, 2007. "Managing risks: what Russian households do to smooth consumption?," MPRA Paper 4670, University Library of Munich, Germany.
    8. Danzer, Alexander M., 2011. "Labor Supply and Consumption Smoothing When Income Shocks Are Non-Insurable," IZA Discussion Papers 5499, Institute for the Study of Labor (IZA).

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