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The impact of labour income risk on household saving decisions in Turkey

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  • Evren Ceritoğlu

Abstract

This paper analyses the Household Budget Surveys prepared by the Turkish Statistical Institute to reveal the empirical importance of precautionary saving in Turkey. The most difficult aspect of the empirical analysis is the approximation of labour income risk as a proxy variable for future labour income uncertainty. Individual disposable income is interacted alternately with the probability of being unemployed and with the probability of job loss in the next period to generate the labour income risk variables. The econometric results support the precautionary saving hypothesis and labour income risk emerges as one of the main determinants of household saving decisions. Moreover, households implement alternative strategies to smooth out their income streams such as holding a second job and increasing the number of income earners in the family. However, it is evident that they are still vulnerable against labour income risk, which underlines the need for an effective and efficient social security system. Copyright Springer Science+Business Media, LLC 2013

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  • Evren Ceritoğlu, 2013. "The impact of labour income risk on household saving decisions in Turkey," Review of Economics of the Household, Springer, vol. 11(1), pages 109-129, March.
    • Handle: RePEc:kap:reveho:v:11:y:2013:i:1:p:109-129
    DOI: 10.1007/s11150-011-9137-2
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    Cited by:

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    2. Andrew Atherton & João R. Faria & Daniel Wheatley & Dongxu Wu & Zhongmin Wu, 2016. "The decision to moonlight: does second job holding by the self-employed and employed differ?," Industrial Relations Journal, Wiley Blackwell, vol. 47(3), pages 279-299, May.
    3. Bande, Roberto & Riveiro, Dolores & Ruiz, Freddy, 2021. "Does Uncertainty Affect Saving Decisions of Colombian Households? Evidence on Precautionary Saving," MPRA Paper 106771, University Library of Munich, Germany.
    4. Aneta M. Klopocka & Rumiana Gorska, 2021. "Forecasting Household Saving Rate with Consumer Confidence Indicator and its Components: Panel Data Analysis of 14 European Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 874-898.
    5. Alba Lugilde & Roberto Bande & Dolores Riveiro, 2018. "Precautionary saving in Spain during the great recession: evidence from a panel of uncertainty indicators," Review of Economics of the Household, Springer, vol. 16(4), pages 1151-1179, December.
    6. Maryna Brychko & Tetyana Vasilyeva & Zuzana Rowland & Serhiy Lyeonov, 2021. "Does the real estate market behavior predict the trust crisis in the financial sector? The case of the ECB and the Euro," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(4), pages 711-740, December.
    7. Aneta Maria Kłopocka & Tomasz Kopczyński & Grażyna Lenicka-Bajer, 2014. "Financial Situation And Attitudes Towards Saving In Polish Society:Evidence From Micro Data," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 0, pages 476-486, May.
    8. Lugilde, Alba & Bande, Roberto & Riveiro, Dolores, 2017. "Precautionary Saving: a review of the theory and the evidence," MPRA Paper 77511, University Library of Munich, Germany.
    9. Marina Matosec & Zdenka Obuljen Zoricic, 2019. "Identifying the Interdependence between Consumer Confidence and Macroeconomic Developments in Croatia," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 17(2-B), pages 345-354.
    10. Jorge Tovar & Miguel Urrutia, 2017. "The Impact of Social Safety Net Programs on Household Savings in Colombia," The Developing Economies, Institute of Developing Economies, vol. 55(1), pages 23-37, March.
    11. Çağaçan DEĞER & Elif ERER, 2020. "Social Security Membership and Saving: The Turkish Case," Sosyoekonomi Journal, Sosyoekonomi Society, issue 28(43).

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    More about this item

    Keywords

    Precautionary saving; Labour income risk; Unemployment insurance; D12; J65;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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