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ResearchPaper
2016

How important is precautionary labor supply?

Abstract (English)

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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Publication series

Hohenheim discussion papers in business, economics and social sciences; 2016,07

Published in

Faculty
Faculty of Business, Economics and Social Sciences
Institute
Institute of Economics

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Language
English

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Classification (DDC)
330 Economics

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BibTeX

@techreport{Schmitz2016, url = {https://hohpublica.uni-hohenheim.de/handle/123456789/6036}, author = {Schmitz, Sebastian and Rostam-Afschar, Davud and Jessen, Robin et al.}, title = {How important is precautionary labor supply?}, year = {2016}, school = {Universität Hohenheim}, series = {Hohenheim discussion papers in business, economics and social sciences}, }