IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-00718702.html
   My bibliography  Save this paper

Precautionary savings by natives and immigrants in Germany

Author

Listed:
  • Yu Zhu

    (School of Economics - University of Kent [Canterbury])

  • Matloob Piracha

    (School of Economics - University of Kent [Canterbury])

Abstract

This paper analyses the savings behaviour of natives and immigrants in Germany. It is argued that uncertainty about future income and legal status (in case of immigrants) is a key component in the determination of the level of precautionary savings. Using the German dataset, we exploit a natural experiment arising from a change in the nationality law in Germany to estimate the importance of precautionary savings. Using difference-in-differences approach, we find a significant reduction in savings and remittances for immigrants after the easing of citizenship requirements, compared to the pre-reform period. Our parametric specification shows that introduction of the new nationality law reduces the gap in marginal propensity to save between natives and immigrants by up to 80%. These findings suggest that much of the differences in terms of the savings behaviour between natives and immigrants are driven by the savings arising from the uncertainties about future income and legal status rather than cultural differences.

Suggested Citation

  • Yu Zhu & Matloob Piracha, 2011. "Precautionary savings by natives and immigrants in Germany," Post-Print hal-00718702, HAL.
    • Handle: RePEc:hal:journl:hal-00718702
    DOI: 10.1080/00036846.2011.566202
    Note: View the original document on HAL open archive server: https://hal.science/hal-00718702
    as

    Download full text from publisher

    File URL: https://hal.science/hal-00718702/document
    Download Restriction: no
    File URL: https://libkey.io/10.1080/00036846.2011.566202?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Bauer & Mathias Sinning, 2011. "The savings behavior of temporary and permanent migrants in Germany," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(2), pages 421-449, April.
    2. Catalina Amuedo-Dorantes & Susan Pozo, 2002. "Precautionary Saving by Young Immigrants and Young Natives," Southern Economic Journal, John Wiley & Sons, vol. 69(1), pages 48-71, July.
    3. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
    4. repec:zbw:rwidps:0029 is not listed on IDEAS
    5. Galor, Oded & Stark, Oded, 1990. "Migrants' Savings, the Probability of Return Migration and Migrants' Performance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 463-467, May.
    6. George J. Borjas, 2021. "Self-Selection and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 4, pages 69-91, World Scientific Publishing Co. Pte. Ltd..
    7. Christopher D. Carroll & Byung-Kun Rhee & Changyong Rhee, 1994. "Are There Cultural Effects on Saving? Some Cross-Sectional Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(3), pages 685-699.
    8. Dustmann, Christian, 1997. "Return migration, uncertainty and precautionary savings," Journal of Development Economics, Elsevier, vol. 52(2), pages 295-316, April.
    9. Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2004. "Do the Rich Save More?," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 397-444, April.
    10. Merkle, Lucie & Zimmermann, Klaus F., 1992. "Savings, remittances, and return migration," Economics Letters, Elsevier, vol. 38(1), pages 77-81, January.
    11. Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Remittances as insurance: evidence from Mexican immigrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 227-254, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas Bauer & Mathias Sinning, 2011. "The savings behavior of temporary and permanent migrants in Germany," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(2), pages 421-449, April.
    2. Mathias Sinning, 2011. "Determinants of savings and remittances: empirical evidence from immigrants to Germany," Review of Economics of the Household, Springer, vol. 9(1), pages 45-67, March.
    3. Hannah Zillessen, 2022. "Uncertainty, Citizenship & Migrant Saving Choices," Economics Series Working Papers 1008, University of Oxford, Department of Economics.
    4. Sinning, Mathias, 2007. "Wealth and Asset Holdings of Immigrants in Germany," IZA Discussion Papers 3089, Institute of Labor Economics (IZA).
    5. Asadul Islam & Jaai Parasnis & Dietrich Fausten, 2013. "Do Immigrants Save Less than Natives? Immigrant and Native Saving Behaviour in Australia," The Economic Record, The Economic Society of Australia, vol. 89(284), pages 52-71, March.
    6. Thomas K. Bauer & Deborah A. Cobb‐Clark & Vincent A. Hildebrand & Mathias G. Sinning, 2011. "A Comparative Analysis Of The Nativity Wealth Gap," Economic Inquiry, Western Economic Association International, vol. 49(4), pages 989-1007, October.
    7. Mathias Sinning, 2007. "Wealth and Asset Holdings of Immigrants in Germany," Ruhr Economic Papers 0030, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Giuseppe Arcangelis & Majlinda Joxhe, 2015. "How do migrants save? Evidence from the British Household Panel Survey on temporary and permanent migrants versus natives," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-23, December.
    9. Swarn Chatterjee, 2009. "Immigrants Have Lower Participation Rates In U.S. Financial Markets?," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 3(2), pages 1-13.
    10. Thomas Bauer & Mathias Sinning, 2005. "The Savings Behavior of Temporary and Permanent Migrants in Germany," RWI Discussion Papers 0029, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    11. Deborah A. Cobb‐Clark & Vincent A. Hildebrand, 2006. "The Wealth And Asset Holdings Of U.S.‐Born And Foreign‐Born Households: Evidence From Sipp Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 17-42, March.
    12. repec:zbw:rwidps:0029 is not listed on IDEAS
    13. repec:zbw:rwirep:0030 is not listed on IDEAS
    14. Catalina Amuedo‐Doranles & Susan Pozo, 2002. "Precautionary Saving by Young Immigrants and Young Natives," Southern Economic Journal, John Wiley & Sons, vol. 69(1), pages 48-71, July.
    15. Sayema H. Bidisha, 2008. "Saving Behaviour of the Immigrants and Ethnic Minorities in the UK: Evidence from Panel Data," Discussion Papers 08/08, University of Nottingham, School of Economics.
    16. Daniel Makina, 2014. "Determinants of Migrants’ Savings in the Host Country: Empirical Evidence of Migrants living in South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 6(1), pages 68-74.
    17. Cobb-Clark, Deborah A. & Hildebrand, Vincent A., 2008. "The Asset Portfolios of Native-Born and Foreign-Born Households," IZA Discussion Papers 3304, Institute of Labor Economics (IZA).
    18. Amelie F. Constant & Rowan Roberts & Klaus F. Zimmermann, 2009. "Ethnic Identity and Immigrant Homeownership," Urban Studies, Urban Studies Journal Limited, vol. 46(9), pages 1879-1898, August.
    19. Eduardo Rodríguez-Montemayor & Pablo M. García, 2009. "A Primer of International Migration: The Latin American Experience," IDB Publications (Working Papers) 9327, Inter-American Development Bank.
    20. Chabé-Ferret, Bastien & Machado, Joël & Wahba, Jackline, 2016. "Return Plans and Migrants' Behavior," IZA Discussion Papers 10111, Institute of Labor Economics (IZA).
    21. Christian Dustmann & Josep Mestres, 2010. "Savings, Asset Holdings, and Temporary Migration," RF Berlin - CReAM Discussion Paper Series 1005, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    22. Bauer Thomas & Sinning Mathias, 2009. "The Purpose of Remittances: Evidence from Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(6), pages 730-742, December.

    More about this item

    Keywords

    Social Sciences & Humanities;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00718702. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.