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Income Uncertainty and Self-Reported Precautionary Wealth: Evidence from the Japanese Micro Data

  • Wako Watanabe

Using unique survey data which includes information on precautionary wealth and its target, we analyze the precautionary saving behavior of Japanese households. Our findings are: 1. Measures for income uncertainty have a positive influence on the target for precautionary wealth but not on precautionary wealth. 2. The positive influence of income uncertainty on the target vanishes when older households with a head aged 51 or older are included in the sample. These findings suggest that Japanese households save against income uncertainty until around when their head is aged 50 and then save against other risks such as the longevity risk.

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File URL: http://www.iser.osaka-u.ac.jp/library/dp/2005/DP0636.pdf
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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0636.

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Date of creation: May 2005
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Handle: RePEc:dpr:wpaper:0636
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  1. Pierre-Olivier Gourinchas & Jonathan A. Parker, 1999. "Consumption Over the Life Cycle," NBER Working Papers 7271, National Bureau of Economic Research, Inc.
  2. Martin Browning & Annamaria Lusardi, 1995. "Household Saving: Micro Theories and Micro Facts," Department of Economics Working Papers 1995-02, McMaster University.
  3. Palumbo, Michael G, 1999. "Uncertain Medical Expenses and Precautionary Saving Near the End of the Life Cycle," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 395-421, April.
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  6. Jonathan Parker & Bruce Preston, 2002. "Precautionary Saving and Consumption Fluctuations," NBER Working Papers 9196, National Bureau of Economic Research, Inc.
  7. Horioka, C.Y., 1991. "Saving in Japan," ISER Discussion Paper 0248, Institute of Social and Economic Research, Osaka University.
  8. Christopher D. Carroll & Karen E. Dynan & Spencer D. Krane, 1999. "Unemployment risk and precautionary wealth: evidence from households' balance sheets," Finance and Economics Discussion Series 1999-15, Board of Governors of the Federal Reserve System (U.S.).
  9. Charles Yuji Horioka & Hideki Fujisaki & Wako Watanabe & Takatsugu Kouno, 2000. "Are Americans More Altruistic than the Japanese? A U.S.-Japan Comparison of Saving and Bequest Motives," NBER Working Papers 7463, National Bureau of Economic Research, Inc.
  10. Zhou, Yanfei, 2003. "Precautionary saving and earnings uncertainty in Japan: A household-level analysis," Journal of the Japanese and International Economies, Elsevier, vol. 17(2), pages 192-212, June.
  11. Carroll, Christopher D. & Samwick, Andrew A., 1997. "The nature of precautionary wealth," Journal of Monetary Economics, Elsevier, vol. 40(1), pages 41-71, September.
  12. Dynan, Karen E, 1993. "How Prudent Are Consumers?," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1104-13, December.
  13. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
  14. Karen E. Dynan, 1993. "How prudent are consumers?," Working Paper Series / Economic Activity Section 135, Board of Governors of the Federal Reserve System (U.S.).
  15. Lusardi, Annamaria, 1998. "On the Importance of the Precautionary Saving Motive," American Economic Review, American Economic Association, vol. 88(2), pages 449-53, May.
  16. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
  17. David W. Campbell & Wako Watanabe, 2001. "Household Saving in Japan," The Japanese Economic Review, Japanese Economic Association, vol. 52(2), pages 243-250.
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