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Precautionary wealth accumulation: evidence from Canadian microdata

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  • Sule Alan

Abstract

This paper estimates the effect of labour income uncertainty on wealth accumulation using two data sources. Wealth information is obtained from the master files of the new Canadian Survey of Financial Security 1999 (SFS). Labour income risk proxies are constucted by industry using the Canadian Survey of Labour and Income Dynamics (SLID) between 1996 and 2001. The empirical results suggest the presence of a strong precautionary saving motive among Canadian households for broad definitions of wealth. Furthermore, consistent with the buffer-stock-saving model, the level of precautionary funds significantly increases when households face liquidity constraints.

Suggested Citation

  • Sule Alan, 2006. "Precautionary wealth accumulation: evidence from Canadian microdata," Canadian Journal of Economics, Canadian Economics Association, vol. 39(4), pages 1105-1124, November.
  • Handle: RePEc:cje:issued:v:39:y:2006:i:4:p:1105-1124
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    Cited by:

    1. Buly A. Cardak & Roger Wilkins, 2008. "The Determinants of Household Risky Asset Holdings: Background Risk and Other Factors," Melbourne Institute Working Paper Series wp2008n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    2. Luc Arrondel & Hector Calvo Pardo, 2008. "Les Français sont-ils prudents ? Patrimoine et risque sur les revenus des ménages," Working Papers halshs-00585994, HAL.
    3. Davies, James B. & Yu, Xiaoyu, 2013. "Impacts of Cyclical Downturns on the Third Pillar of the RIS and Policy Responses," CLSSRN working papers clsrn_admin-2013-20, Vancouver School of Economics, revised 29 Apr 2013.
    4. Luc Arrondel & Hector Calvo Pardo, 2008. "Les Français sont-ils prudents ? Patrimoine et risque sur les revenus des ménages," PSE Working Papers halshs-00585994, HAL.

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