CEU Electronic Theses and Dissertations, 2008
| Author | Hudomiet, Péter |
|---|---|
| Title | Expectations and Savings Behavior |
| Summary | This study shows that the expectation about future labor market status has a significant effect on the savings behavior of individuals. In the first part of the study, a simple consumption model is built. It predicts that those whose labor market status is expected to be less stable, save more/consume less to prepare for later periods of unemployment. Using data from the Health and Retirement Study, I test whether subjective job loss probability has a significant positive, and subjective job finding probability has a significant negative effect on the savings rate. Of these two, the role of uncertainty about finding a new job is found to be stronger. I show that it has a negative effect on different types of savings; the effect is robust to the use of several control variables, and also to fixed unobserved heterogeneity in the savings rate. However, the effect of the job loss probability is less clear. In the second part of this study I test whether job-loss expectations based on subjective probability questions contain hidden, otherwise unobservable information about the displacement-risk individuals face. I also develop an estimator that enables me to derive expected employment spells, and I find interesting differences between the expected and realized survival paths. |
| Supervisor | Gabor Kezdi |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2008/hudomiet_peter.pdf |
Visit the CEU Library.
© 2007-2021, Central European University