The Effect of Health and Employment Risks on Precautionary Savings

Johannes Geyer

No 1167, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper extends the idea of using ex-ante risk measures in a model of precautionary savings by explicitly simulating future net-income risks. The uncertainty measure takes into account the interdependency of labour market status and health. The model is estimated for prime age males using the German Socio-Economic Panel Study for years 2001-2007. The empirical analysis is conducted using a measure for saving stocks and saving flows. The latter model allows to control for individual specific effects. I find evidence for precautionary savings in response to the uncertainty measures. The results are robust and stable across specifications. There is evidence for a share of precautionary wealth of about 14 to 17 percent.

Keywords: Precautionary savings; health; employment; risks (search for similar items in EconPapers)
JEL-codes: D91 E21 (search for similar items in EconPapers)
Pages: 66 p.
Date: 2011
New Economics Papers: this item is included in nep-hea
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Citations: View citations in EconPapers (8)

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Working Paper: The Effect of Health and Employment Risks on Precautionary Savings (2011)
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