Journal Article

How important is precautionary labour supply?

Robin Jessen, Davud Rostam-Afschar and Sebastian Schmitz

in Oxford Economic Papers

Volume 70, issue 3, pages 868-891
Published in print July 2018 | ISSN: 0030-7653
Published online January 2018 | e-ISSN: 1464-3812 | DOI: https://dx.doi.org/10.1093/oep/gpx053
How important is precautionary labour supply?

More Like This

Show all results sharing these subjects:

  • Single Equation Models; Single Variables
  • Household Behaviour and Family Economics
  • Macroeconomics: Consumption, Saving, Production, Employment, and Investment
  • Demand and Supply of Labour

GO

Show Summary Details

Preview

Abstract

We quantify the importance of precautionary labour supply defined as the difference between hours supplied in the presence of risk and hours under perfect foresight. Using the German Socio-Economic Panel from 2001 to 2012, we estimate the effect of wage risk on labour supply and test for constrained adjustment of labour supply. We find that married men choose on average about 2.8% of their hours of work to shield against wage shocks. The effect is strongest for self-employed, who we find to be unconstrained in their hours choices, but also relevant for other groups with more persistent hours constraints. If the self-employed faced the same wage risk as the median civil servant, their hours of work would be reduced by 4.5%.

Keywords: C23; D12; E21; J22

Journal Article.  9117 words.  Illustrated.

Subjects: Single Equation Models; Single Variables ; Household Behaviour and Family Economics ; Macroeconomics: Consumption, Saving, Production, Employment, and Investment ; Demand and Supply of Labour

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content. subscribe or login to access all content.