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Earnings uncertainty, precautionary saving, and moonlighting in Russia

Author

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  • Alessandra Guariglia
  • Byung-Yeon Kim

Abstract

Using a panel of 3,522 Russian households over the period 1994-2000, this paper tests the precautionary saving hypothesis, according to which households save to self-insure against uncertainty. We proxy uncertainty with a measure of earnings variability based on the subjective probability of primary job loss of household heads, and find that this variable generally has a strong positive effect on saving, supporting the precautionary saving hypothesis. This effect is however reversed for those households whose head holds more than one job, highlighting the role of moonlighting as a self-insurance mechanism that can be used in alternative to precautionary saving to smooth consumption in the presence of fluctuating earnings. Our findings are robust to different measures of uncertainty and estimation procedures. Copyright Springer-Verlag 2004

Suggested Citation

  • Alessandra Guariglia & Byung-Yeon Kim, 2004. "Earnings uncertainty, precautionary saving, and moonlighting in Russia," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 289-310, June.
    • Handle: RePEc:spr:jopoec:v:17:y:2004:i:2:p:289-310
    DOI: 10.1007/s00148-004-0184-3
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    More about this item

    Keywords

    Precautionary saving; earnings uncertainty; moonlighting; D12; E21; P20;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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