Unemployment Risk, Precautionary Savings, and Moonlighting in Russia

Alessandra Guariglia and Byung-Yeon Kim

No 232, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: Using a panel of 3,039 Russian households over the period 1994-96, this paper tests the precautionary savings hypothesis and investigates whether multiple job holding attenuates the need for precautionary savings. A measure of earnings variability based on the subjective probability of primary job loss of household heads is used as a proxy for risk. We find that risk strongly affects savings, although this effect is limited to those households whose head holds only one job. These findings are robust to different measures of savings and model specifications, and highlight the role of moonlighting as a self-insurance mechanism that individuals can use to smooth consumption in the presence of fluctuating earnings.

Keywords: precautionary savings; earnings variability; moonlighting (search for similar items in EconPapers)
JEL-codes: C23 D12 D91 E21 P20 (search for similar items in EconPapers)
Pages: pages
Date: 1999-06-01
New Economics Papers: this item is included in nep-lab and nep-tra
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Citations: View citations in EconPapers (4)

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