Precautionary Savings by Natives and Immigrants in Germany
This paper analyses the savings behaviour of natives and immigrants in Germany. It is argued that uncertainty about future income and legal status (in case of immigrants) is a key component in the determination of the level of precautionary savings. Using the German dataset, we exploit a natural experiment arising from a change in the nationality law in Germany to estimate the importance of precautionary savings. Using difference-in-differences approach, we find a significant reduction in savings and remittances for immigrants after the easing of citizenship requirements, compared to the pre-reform period. Our parametric specification shows that introduction of the new nationality law reduces the marginal propensity to save gap between natives and immigrants by up to 80%. These findings suggest that much of the differences in terms of the savings behaviour between natives and immigrants are driven by the savings arising from the uncertainties about future income and legal status rather than cultural differences.
|Date of creation:||Dec 2008|
|Contact details of provider:|| Postal: School of Economics, University of Kent, Canterbury, Kent, CT2 7NP|
Phone: +44 (0)1227 827497
Web page: http://www.kent.ac.uk/economics/
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- George J. Borjas, 1987.
"Self-Selection and the Earnings of Immigrants,"
NBER Working Papers
2248, National Bureau of Economic Research, Inc.
- Karen E. Dynan & Jonathan Skinner & Stephen Zeldes, 2000.
"Do the rich save more?,"
Finance and Economics Discussion Series
2000-52, Board of Governors of the Federal Reserve System (U.S.).
- Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
- Dustmann, Christian, 1997. "Return migration, uncertainty and precautionary savings," Journal of Development Economics, Elsevier, vol. 52(2), pages 295-316, April.
- Merkle, Lucie & Zimmermann, Klaus F., 1992. "Savings, remittances, and return migration," Economics Letters, Elsevier, vol. 38(1), pages 77-81, January.
- Galor, Oded & Stark, Oded, 1990. "Migrants' Savings, the Probability of Return Migration and Migrants' Performance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 463-467, May.
- Thomas Bauer & Mathias Sinning, 2011.
"The savings behavior of temporary and permanent migrants in Germany,"
Journal of Population Economics,
Springer;European Society for Population Economics, vol. 24(2), pages 421-449, April.
- Bauer, Thomas K. & Sinning, Mathias, 2005. "The Savings Behavior of Temporary and Permanent Migrants in Germany," RWI Discussion Papers 29, RWI - Leibniz-Institut für Wirtschaftsforschung.
- Bauer, Thomas K. & Sinning, Mathias, 2005. "The Savings Behavior of Temporary and Permanent Migrants in Germany," IZA Discussion Papers 1632, Institute for the Study of Labor (IZA).
- Bauer, Thomas & Sinning, Mathias, 2005. "The Savings Behaviour of Temporary and Permanent Migrants in Germany," CEPR Discussion Papers 5102, C.E.P.R. Discussion Papers.
- Catalina Amuedo-Dorantes & Susan Pozo, 2002. "Precautionary Saving by Young Immigrants and Young Natives," Southern Economic Journal, Southern Economic Association, vol. 69(1), pages 48-71, July.
- Christopher D. Carroll & Byung-Kun Rhee & Changyong Rhee, 1994. "Are There Cultural Effects on Saving? Some Cross-Sectional Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 685-699.
- Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Remittances as insurance: evidence from Mexican immigrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 227-254, June.
When requesting a correction, please mention this item's handle: RePEc:ukc:ukcedp:0821. 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: (Tracey Girling)
If references are entirely missing, you can add them using this form.