Unemployment risk and buffer-stock saving: An empirical investigation in Japan

Shun ichiro Bessho, Eiko Tobita

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

The purpose of this paper is to investigate, using micro data, the strength in Japan of the precautionary saving motive. While numerical simulations suggest the economic importance of precautionary saving, the empirical evidence is mixed. In this paper, we apply the buffer-stock saving model and focus on the effect of unemployment risk on wealth accumulation. We find that uncertainty has a positive and statistically significant effect on the wealth-to-income ratio, and that buffer-stock savings account for 6 or 15 percent of net financial assets. Housing loans and expenditures associated with children decrease this ratio.

Original languageEnglish
Pages (from-to)303-325
Number of pages23
JournalJapan and The World Economy
Volume20
Issue number3
DOIs
Publication statusPublished - 2008 Aug 1

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Keywords

  • Buffer-stock saving
  • Unemployment risk

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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