Precautionary Savings-A Panel Study
Theoretical literature shows that income uncertainty boosts saving, yet empirical work is incomplete. I test for the precautionary motive for saving using panel data. Knowing this motive's size is important for gauging the responsiveness of saving to government programs that reduce uncertainty, and for comparison to other motives, such as bequests. Most empirical studies of precautionary saving use either aggregate time-series or cross-sectional data, which cannot capture the effects of individual income uncertainty. I derive measures of total, permanent, and transitory income uncertainty from panel data - the National Longitudinal Survey - and find a strong precautionary motive. A doubling of uncertainty increases the ratio of wealth to permanent income by 29%. © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 79 (1997)
Issue (Month): 2 (May)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535|
When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:79:y:1997:i:2:p:241-247. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Pollock-Nelson)
If references are entirely missing, you can add them using this form.