Ruhr Economic Papers

Ruhr Economic Papers #380

Job Security Perceptions and the Saving Behavior of German Households

by Marcus Klemm

RUB, RGS Econ, 10/2012, 34 S./p., 8 Euro, ISBN 978-3-86788-435-8 DOI: 10.4419/86788435



This paper investigates the co-movements of job security perceptions and household saving rates using data from the 1992 to 2010 waves of the German Socio-Economic Panel. The empirical analysis reveals that higher job insecurity is generally accompanied by slightly lower saving which suggests that employment and financial insecurity typically go hand-in-hand. When confounding changes in the perception of financial security are controlled for, slight evidence for precautionary saving behavior is found. This behavior is of rather small economic importance and limited to households that are somewhat worried about their financial situation who increase their saving by about 0.3%-points or EUR 100 annually in the light of increased job insecurity. In contrast, no significant change in saving is observed for households that are either very concerned or not at all concerned about their financial situation, i.e., either financially constrained or in possession of a buffer-stock of wealth.

JEL-Classification: D12, D91, J65

Keywords: Precautionary saving behavior; job insecurity; unemployment risk