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The impact of labour income risk on household saving decisions in Turkey

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  • Evren Ceritoğlu

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Abstract

This paper analyses the Household Budget Surveys prepared by the Turkish Statistical Institute to reveal the empirical importance of precautionary saving in Turkey. The most difficult aspect of the empirical analysis is the approximation of labour income risk as a proxy variable for future labour income uncertainty. Individual disposable income is interacted alternately with the probability of being unemployed and with the probability of job loss in the next period to generate the labour income risk variables. The econometric results support the precautionary saving hypothesis and labour income risk emerges as one of the main determinants of household saving decisions. Moreover, households implement alternative strategies to smooth out their income streams such as holding a second job and increasing the number of income earners in the family. However, it is evident that they are still vulnerable against labour income risk, which underlines the need for an effective and efficient social security system. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Evren Ceritoğlu, 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.
  • Handle: RePEc:kap:reveho:v:11:y:2013:i:1:p:109-129
    DOI: 10.1007/s11150-011-9137-2
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    References listed on IDEAS

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    Cited by:

    1. repec:spr:soinre:v:133:y:2017:i:2:d:10.1007_s11205-016-1376-4 is not listed on IDEAS
    2. Aneta Maria Kłopocka & Tomasz Kopczyński & Grażyna Lenicka-Bajer, 2014. "Financial Situation And Attitudes Towards Saving In Polish Society:Evidence From Micro Data," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 0, pages 476-486, May.
    3. Lugilde, Alba & Bande, Roberto & Riveiro, Dolores, 2017. "Precautionary Saving: a review of the theory and the evidence," MPRA Paper 77511, University Library of Munich, Germany.
    4. repec:bla:deveco:v:55:y:2017:i:1:p:23-37 is not listed on IDEAS

    More about this item

    Keywords

    Precautionary saving; Labour income risk; Unemployment insurance; D12; J65;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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