Income composition and propensities to consume

X. Bonnet and H. Poncet
Additional contact information
X. Bonnet: Insee
H. Poncet: Insee

Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques

Abstract: So as to better understand households' consumption behaviour, the composition of incomes was not as regarded as wealth structure. Since the 80s in France, the former has dramatically changed though, retirement and unemployment transfers taking a heavier weight. Various reasons can justify that the income composition influences consumption. Aggregation of behaviours of different households with different propensity to consume is a first reason. A second one is that some incomes are more persistent and are consequently more consumed: a positive shock for these incomes is translated into a higher increase of permanent income. An illustration is proposed within the life-cycle model framework for both these justifications. Econometric estimations, with data from the national accounts at 1995 constant prices, show that the propensity to consume dependent wages, social transfers and self-employed incomes is higher that for other incomes. In comparison with other specifications which insist on wealth effects or interest rate effects, we find this result challenging. But, a future research using micro data would be most welcome to confirm it. Above all, the high propensity to consume self-employed incomes should be studied more precisely. And new national accounts will also bring another test of robustness for this result.

Keywords: propensity to consume; income composition; forecasting (search for similar items in EconPapers)
JEL-codes: E21 E25 E27 (search for similar items in EconPapers)
Date: 2004
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.bnsp.insee.fr/ark:/12148/bc6p06zqp6j/f1.pdf Document de travail de la DESE numéro G2004-12 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nse:doctra:g2004-12

Access Statistics for this paper

More papers in Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques Contact information at EDIRC.
Bibliographic data for series maintained by INSEE ().