Were Nineteenth-Century Industrial Workers Permanent Income Savers?

Howard Bodenhorn

No 23948, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Theories of household saving posit that households add to or draw down wealth to equalize the discounted presented value of consumption over time. This paper examines the extent to which nineteenth-century urban American industrial workers used saving and dissaving to smooth consumption in response to unanticipated, plausibly exogenous, shocks to income. Information on the expected and unexpected number of days unemployed is used to construct estimates of transitory income. The data are then used to estimate the marginal propensity to save from transitory income, and the results are broadly consistent with Friedman’s (1957) permanent income hypothesis.

JEL-codes: D15 N21 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-his
Note: DAE
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Published as Howard Bodenhorn, 2019. "Were Nineteenth‐Century Industrial Workers Permanent Income Savers?," Southern Economic Journal, vol 85(4), pages 1286-1310.

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