Saving behaviour and earnings uncertainty: Evidence from the British Household Panel Survey
For the first time, this paper uses a panel data set, the British Household Panel Survey, to analyse saving behaviour in Britain. One objective is to test the precautionary saving hypothesis, according to which households save to self-insure against uncertainty. Our results show that in accordance with this hypothesis, various measures of uncertainty based on earnings variability have a statistically significant effect on households' saving decisions. Moreover, in accordance with the life cycle model, households save more if they expect their financial situation to deteriorate.
Volume (Year): 14 (2001)
Issue (Month): 4 ()
|Note:||Received: 15 June 1999/Accepted: 4 January 2001|
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