Ökonomische Risiken, Ersparnisbildung Älterer und der Einfluss der Wirtschaftspolitik - eine vergleichende empirische Studie für Deutschland und Polen
Final Report Abstract
The aim of the project was to empirically investigate the relationship between economic risks and precautionary saving of older people in Germany. For this purpose a microeconometric model of household savings including a new uncertainty measure was specified and estimated based on the German Socioeconomic Panel (SOEP). The main methodological innovation consists in the explicit modelling of economic risks, in particular the risk of becoming disabled, the unemployment risk and the wage risk. Microeconometric estimates of these risks at the individual level are used to derive a measure of income uncertainty as an explanatory variable in empirical savings equations estimated on household panel data for Germany. The project has established various important empirical results: By decomposing the cross-sectional variance of wages and earnings in Germany into a permanent and a transitory part, it was shown that the transitory component has increasingly gained importance relative to the permanent component from about 2000 onward. This observation partly motivates the main part of the project which relates the economic risks facing adult households in Germany to their savings behavior. An important result from the project concerns the dynamic interrelationship between poor health and employment, and how this affects our measure of income uncertainty. Estimation results from a dynamic microeconometric model of health and labor market risks of adult German men confirm a significant interaction between the two outcomes and demonstrate persistence in both processes. Simulation results demonstrate the importance of the initial health and labor market conditions for the development of the employment rate over the lifecycle and show that the onset of permanent poor health significantly lowers individual employment probabilities and future income prospects. Another important result from the project concerns the relationship between poor health and working hours of older workers. For prime-age men it was shown, based on a dynamic microeconometric model, that the disequilibrium between actual and desired working hours is significantly affected by self-assessed current and lagged poor health at least in West German, whereas no significant effect of an individual’s objectively assessed disability status on the hours disequilibrium could be detected. These results suggest that the possibility of flexible hours adjustment, in particular among older and less healthy individuals, would play an important role in their decisions to remain active on the labour market, and this may also affect their income expectations and savings behaviour. Estimation results from empirical savings equations including our measure of uncertainty derived from the estimates of economic risks show that income uncertainty has a significant positive effect on savings flows in both East and West Germany. For the buffer-stock wealth model with two different wealth aggregates (financial wealth and net worth). income uncertainty has a significantly positive effect at least in West Germany. Simulation results based on these estimates show that, on average, about 15 percent of savings flows can be attributed to the precautionary motive. Similar estimates of the share of precautionary savings are also implied by the buffer-stock model, with a somewhat higher share for financial assets only. Thus, the empirical results from this project are more stable than those found in previous research based on alternative measures of income uncertainty and show that the new measure of economic risks proposed in this project is a promising approach to the modeling of the precautionary savings motive.
Publications
- (2009), “Dynamics of Health and Labor Market Risks” Journal of Health Economics, 6 , 1116-1125
Haan, Peter, Michal Myck
- (2010), “Poorer Health – Shorter Hours? Health and Flexibility of Hours of Work”. IZA Discussion Paper 5169, IZA Bonn
Geyer, Johannes, Michal Myck
- (2011): “Dynamics in Transitory and Permanent Variation of Wages in Germany”. In: Economics Letters, 113, 2, 143-146
Myck, Michal, Richard Ochmann, Salmai Qari
- (2011): “The effect of health and employment risks on precautionary savings”. DIW Discussion Paper 1167, DIW Berlin
Geyer, Johannes
