scholarly journals Dynastic Precautionary Savings

2021 ◽  
Author(s):  
Corina Boar
Keyword(s):  
Panel Study ◽  
Precautionary Saving ◽  
Permanent Income ◽  
Precautionary Savings ◽  
Income Dynamics ◽  
Income Risk ◽  
Income Uncertainty ◽  
Parent Child

Abstract This article documents that parents accumulate savings to insure their children against income risk. I refer to this behaviour as dynastic precautionary saving. Using a sample of matched parent–child pairs from the Panel Study of Income Dynamics, I test for dynastic precautionary savings by examining the response of parental consumption to the child’s permanent income uncertainty. I exploit variation in permanent income risk across age and industry–occupation groups to confirm that, all else equal, higher uncertainty in the child’s permanent income depresses parental consumption, indicating a precautionary saving motive across generations.

scholarly journals Tax Reform and Automatic Stabilization

2002 ◽  
Vol 92 (3) ◽  
pp. 411-433 ◽  
Author(s):  
Thomas J Kniesner ◽  
James P Ziliak
Keyword(s):  
Income Tax ◽  
Panel Study ◽  
Welfare Cost ◽  
Risk Averse ◽  
Income Dynamics ◽  
Income Risk ◽  
Tax Reforms ◽  
Automatic Stabilization ◽  
Consumption Insurance ◽  
Federal Income Tax

An income tax provides implicit insurance by dampening the variability of disposable income and consumption. Using an empirical framework derived from the consumption insurance literature and data from the Panel Study of Income Dynamics we examine the effect of federal income tax reforms of the 1980's on automatic stabilization of consumption. Overall, ERTA and TRA86 reduced consumption stability by about 50 percent. Recently increased EITC generosity restored or enhanced consumption insurance. The welfare cost of moving to the post-TRA86 system is sizable for relatively risk-averse households facing large income risk but is much more modest for the typical household.

scholarly journals A possibilistic and probabilistic approach to precautionary saving

2017 ◽  
Vol 64 (3) ◽  
pp. 273-295 ◽  
Author(s):  
Irina Georgescu ◽  
Adolfo Cristóbal-Campoamor ◽  
Ana Lucia-Casademunt
Keyword(s):  
Fuzzy Number ◽  
Mixed Models ◽  
Probabilistic Approach ◽  
Random Variable ◽  
Precautionary Saving ◽  
Optimal Choice ◽  
Background Risk ◽  
Precautionary Savings ◽  
Income Risk ◽  
Optimal Saving

This paper proposes two mixed models to study a consumer?s optimal saving in the presence of two types of risk: income risk and background risk. In the first model, income risk is represented by a fuzzy number and background risk by a random variable. In the second model, income risk is represented by a random variable and background risk by a fuzzy number. For each model, three notions of precautionary savings are defined as indicators of the extra saving induced by income and background risk on the consumer?s optimal choice. In conclusion, we can characterize the conditions that allow for extra saving relative to optimal saving under certainty, even when a certain component of risk is modelled using fuzzy numbers.

scholarly journals Precautionary Saving and Income Uncertainty in Germany – New Evidence from Microdata

2008 ◽  
Vol 228 (1) ◽  
Author(s):  
Nikolaus Bartzsch
Keyword(s):  
Risk Aversion ◽  
Cross Section ◽  
Panel Study ◽  
Precautionary Saving ◽  
Housing Wealth ◽  
Income Uncertainty ◽  
Financial Wealth ◽  
Alternative Measures ◽  
New Evidence ◽  
Precautionary Wealth

SummaryThis paper uses microdata from the German Socio-Economic Panel Study (GSOEP) to analyse the importance of precautionary saving under income uncertainty. In a cross-section of households, wealth in 2002 is regressed on alternative measures of income uncertainty. In addition to the usual controls, risk aversion is also taken into account. When using net financial wealth, precautionary saving is statistically significant and economically quite important. Precautionary net financial wealth is estimated to make up, on average, around 20% of total aggregate net financial wealth. Unlike net financial wealth, housing wealth is not used as a buffer stock against income uncertainty, the most likely reason being its illiquidity in Germany. Not controlling for risk aversion leads to an overestimation of precautionary wealth. This result contradicts the findings of Fuchs-Schündeln and Schündeln (2005) who suggest that, owing to self-selection, not controlling for risk aversion results in a significant reduction in aggregate precautionary wealth holdings.

Marriage as a Mechanism of Internalizing Externalities: A Case of Smoking

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Jane J. You
Keyword(s):  
Positive Impact ◽  
Panel Study ◽  
Legal Institution ◽  
Income Dynamics ◽  
Negative Externalities ◽  
Long Run ◽  
Married Individuals

Abstract With the view of marriage as a legal institution to internalize externalities, I examine the effect of marriage on smoking. From analyzing the data of Panel Study of Income Dynamics, I found that unmarried individuals are more likely to smoke by 4.9% point than married individuals with stronger impact on females. The long-run impact of marriage also shows that the unmarried individuals smoke more than married individuals but some of its positive impact diminishes within two years. These results on the whole imply that marriage internalizes the negative externalities of smoking and thus leads smokers to reduce smoking.

Using intentions to predict fertility

2021 ◽  
pp. 1-26
Author(s):  
Johannes Norling
Keyword(s):  
Rational Expectations ◽  
Panel Study ◽  
Income Dynamics ◽  
Number Of Children ◽  
Childless Women

Abstract On average, childless women observed by the Panel Study of Income Dynamics report that they intend to have more children than they actually have. A collection of intentions that record only whether respondents intend to have another child can more accurately predict the number of children they have. Errors in the formation of intentions are not required to explain this finding. Rather, if intentions record a survey respondent's most likely predicted number of children, then the average of these intentions does not necessarily equal average actual fertility, even if intentions are formed using rational expectations.

scholarly journals Intergenerational Mobility in the United States: What We Have Learned from the PSID

2018 ◽  
Vol 680 (1) ◽  
pp. 213-234 ◽  
Author(s):  
Bhashkar Mazumder
Keyword(s):  
United States ◽  
Socioeconomic Status ◽  
Life Cycle ◽  
Intergenerational Mobility ◽  
Panel Study ◽  
The United States ◽  
Group Differences ◽  
Income Dynamics ◽  
Mobility Studies ◽  
Advanced Economies

This article reviews the contributions of the Panel Study of Income Dynamics (PSID) to the study of intergenerational mobility. The PSID enables researchers to track individuals as they form new households and covers many dimensions of socioeconomic status over large portions of the life cycle, making the data ideal for studying intergenerational mobility. Studies have used PSID data to show that the United States is among the least economically mobile countries among advanced economies. The PSID has been instrumental to understanding various dimensions of intergenerational mobility, including occupation; wealth; education; consumption; health; and group differences by gender, race, and region. Studies using the PSID have also cast light on the mechanisms behind intergenerational persistence.

Differentiating between the Living Standards of Husbands and Wives in Two-Wage-Earner Families, 1968 and 1979

1983 ◽  
Vol 43 (1) ◽  
pp. 231-240 ◽  
Author(s):  
Roberta M. Spalter-Roth
Keyword(s):  
Panel Study ◽  
Living Standards ◽  
Wage Earner ◽  
Income Dynamics ◽  
Feminist Analysis

This paper applies a feminist analysis to the measurement of living standards during the 1970s. It suggests that widely made assumptions of homogeneous pooling and redistribution of income, labor, and expenditures within families mask inequalities and uneven changes in the living standards of wage-working husbands and wives. Two waves of the Panel Study of Income dynamics are used to create two rough indicators, that is, reproduction pay and surplus, to test for inequalities and uneven changes in 1968 and again in 1979. In general, the findings show differential living standards between husbands and wives when assumptions of homogeneous pooling and redistribution are not made. The paper concludes that the suggested rough indicators are useful for the measurement of living standards.

scholarly journals Where Are You From? Assortative Mating by Place of Origin in the United States

2020 ◽  
Author(s):  
HAO-CHUN CHENG
Keyword(s):  
United States ◽  
Assortative Mating ◽  
Panel Study ◽  
Marriage Market ◽  
The United States ◽  
Place Identity ◽  
Income Dynamics ◽  
Social Dimensions ◽  
Place Of Origin ◽  
And Gender

Previous studies showed that assortative mating occurred based on different social dimensions, such as age, education, and race or ethnicity. However, these studies ignored the potential impact of place of origin on people’s place identity and habitus and their associations with assortative mating in the United States. Using the Panel Study of Income Dynamics (PSID), in conjunction with the Current Population Survey (CPS), this study finds a clear pattern of assortative mating based on place of origin. Moreover, the results suggest that there are regional differences in assortative mating by place of origin, especially for women. Also, the length of residence shapes people’s habitus and thus the pattern of homogeneous matching by place of origin. The significant effects of race or ethnicity and the conditions of the marriage market before marriage vary by scale of place and gender. These findings suggest that place of origin is another dimension of assortative mating.

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