How important is precautionary labor supply?

Robin Jessen, Davud Rostam-Afschar, Sebastian Schmitz

We quantify the importance of precautionary labor supply using data from the German Socio-Economic Panel (SOEP) for 2001-2012. We estimate dynamic labor supply equations augmented with a measure of wage risk. Our results show that married men choose about 2.5% of their hours of work or one week per year on average to shield against unpredictable wage shocks. This implies that about 26% of precautionary savings are due to precautionary labor supply. If self-employed faced the same wage risk as the median civil servant, their hours of work would reduce by 4%.

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Year of publication:	June 3, 2016 ; This version: June 3, 2016
Authors:	Jessen, Robin ; Rostam-Afschar, Davud ; Schmitz, Sebastian
Publisher:	Berlin, Germany : German Socio-Economic Panel (SOEP), DIW Berlin
Subject:	Wage Risk \| Labor Supply \| Precautionary Saving \| Life Cycle \| Dynamic Panel Data \| Arbeitsangebot \| Labour supply \| Arbeitslosigkeit \| Unemployment \| Risiko \| Risk \| Arbeitsangebotsverhalten \| Labour supply behaviour \| Arbeitszeitgestaltung \| Working time arrangement \| Vorsichtssparen \| Precautionary saving \| Deutschland \| Germany \| 2001-2012

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Extent:	1 Online-Ressource (circa 37 Seiten) Illustrationen
Series:	SOEP papers on multidisciplinary panel data research / German Socio-Economic Panel Study (SOEP), DIW Berlin. - Berlin : DIW, ISSN 1864-6689, ZDB-ID 2403710-2. - Vol. 850
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Other identifiers:	hdl:10419/144550 [Handle]
Classification:	D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving ; J22 - Time Allocation and Labor Supply ; C23 - Models with Panel Data
Source:	ECONIS - Online Catalogue of the ZBW

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