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

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.     

Perceived Job Insecurity of White and Black Workers: An Expanded Gap in Organizations with Layoff Prevention Commitment

This study investigates the racial disparity in perceived job insecurity between black and white workers in the context of employers’ layoff prevention commitment. Using a unique employer-employee dataset combining the General Social Survey (2002) and the National Organization Survey (2002), we find that human capital indicators, job characteristics, and previous job loss are not sufficient to account for the high job insecurity perceived by black workers. Rather, an organizational commitment to avoid layoffs is a significant factor conditioning the racial disparity in perceived job insecurity. While the presence of an organizational commitment to prevent layoffs expands the racial disparity in perceived job insecurity, the absence of such a commitment to prevent layoffs attenuates such disparity.     

Manager Characteristics and Employee Job Insecurity around a Merger Announcement: The Role of Status and Crossover

Most existing research theorizes individual factors as predictors of perceived job insecurity. Incorporating contextual and organizational factors at an information technology organization where a merger was announced during data collection, we draw on status expectations and crossover theories to investigate whether managers' characteristics and insecurity shape their employees' job insecurity. We find having an Asian as opposed to a White manager is associated with lower job insecurity, whereas managers' own insecurity positively predicts employees' insecurity. Also contingent on the organizational climate, managers' own tenure buffers, and managers' perceived job insecurity magnifies insecurity of employees interviewed after a merger announcement, further specifying status expectations theory by considering context.     

What motivates single women to save? the case of Japan

Using Japanese panel data, we analyze precautionary savings due to staying single in the presence of income uncertainty. Our panel analysis finds that compared with young women who are likely to get married within 3 years, those who are not plan to have 44 percent more savings for precautionary purposes, and 108 percent more for retirement. These results suggest that in facing higher risk of income fluctuation due to choosing to marry late or remain unmarried, young women intend to have more wealth to mitigate the income risk inherent in single life.     

Neighborhood poverty and children's food insecurity

Food insecurity among children and their families negatively affects children's health and well-being. While the link between household resources and food insecurity is well-established, family income alone does not explain food insecurity; neighborhood disadvantage, shown to affect other areas of children's development, may also play a role in food insecurity. This study examines associations between neighborhood poverty and children's food insecurity, and whether family characteristics account for identified associations. We merge data on kindergarten-age children from the Early Childhood Longitudinal Study-Kindergarten 2010–11 Cohort (ECLS-K:2011) with data on poverty rates from the American Community Survey (ACS) and on food access from the USDA's Food Environment Atlas using children's residential census tracts (N = 12.550 children in 3750 tracts). Using a series of multilevel models, we test for associations between neighborhood poverty, household economic, demographic, and parenting characteristics, and food insecurity at the child, adult, and household levels. Children living in higher-poverty neighborhoods are more likely to experience food insecurity than those in lower-poverty neighborhoods. Associations between neighborhood poverty and household- and adult-level food insecurity disappear when household characteristics are controlled. However, living in a very high poverty neighborhood remains predictive of child-level food insecurity, which may be an indicator of severe hardship. Findings indicate that neighborhood poverty may be a useful proxy to identify vulnerable children.     

Household Finance and Food Insecurity

Despite repeated expansions of federal food assistance, food insecurity and hunger continue to affect many Americans. While job loss and poverty are among major contributors, theoretical and empirical literature suggest that households’ ability to borrow and save might provide a buffer protecting from food insecurity. Using data from the Panel Study of Income Dynamics, we tested whether liquidity constraint, asset inadequacy, and insolvency risk defined based on financial ratios could predict household food insecurity separately from the effects of income and program participation. Results showed that a household’s liquidity constraint and asset inadequacy were linked with increased risk of food insecurity at all income levels, although the association was strongest among poor households and those with incomes slightly above the federal food assistance eligibility threshold. Unlike indications from qualitative literature, financial constraint appeared to be an exogenous determinant of household food insecurity. Implications for financial practitioners and policymakers are discussed.     

Precaution and liquidity in the demand for housing

We exploit cross-sectional mortgage data to investigate the importance of liquidity constraints and a precautionary motive in the demand for housing. Households that are not liquidity constrained consume housing services essentially as the life cycle hypothesis suggests but with a significant precautionary component. Households that are liquidity constrained, in terms of not meeting standard loan-to-value or payments-to-income constraints, are similar to unconstrained households in most respects, including the precautionary motive, but they respond somewhat less to fluctuations in their lifetime income - suggesting some influence of bank-induced liquidity constraints. We additionally find, however, that banks enforce liquidity constraints only weakly.     

Income in jeopardy: How losing employment affects the willingness to take risks

Identifying the determinants of risk-taking is crucial for our understanding of a variety of choices. Using German panel data, we find that people become more risk-averse when losing work. The immediate income loss does not mediate this effect. It seems also unrelated to the loss of non-monetary benefits of work and to changes of worker’s emotional state. However, we find that risk aversion responds the more strongly to losing work the more future income is at stake, and that the effect manifests itself already on the eve of job loss when people do not yet suffer from the consequences of the event. We conclude that lower future income expectations and more uncertainty about future incomes may explain the effect of job loss on risk attitude. Our results might imply that a recession may reinforce itself as it induces people to fear job loss, which raises their risk aversion and might therefore reduce the willingness to invest in risky projects. Moreover, self-assessed risk attitude seems to measure absolute risk aversion and thus not only an underlying risk preference parameter.     

THE FRAGILE AMERICAN: Hardship and Financial Troubles in the 21st Century

Rising economic insecurity at the turn of the 21st century made Americans increasingly vulnerable to financial distress. Studies of bankruptcy records show that personal hardships like health problems, divorce, job loss, and income disruption are the major reasons Americans fall into financial ruin. This article uses nationally representative data from the Survey of Consumer Finances to study the relationship between hardship and a range of financial troubles including bankruptcy, default, and credit access. We differentiate this analysis by class, expecting that debt troubles fall especially hard on middle‐income families. Our results show that while the middle class is distinctly vulnerable, multiple financial troubles accompany hardship for all classes.     

The impact of husband’s job loss on partners’ mental health

The objective of this paper is to examine the impact of job loss on family mental well-being. The negative income shock can affect the mental health status of the individual who directly experiences such displacement, as well as the psychological well-being of his partner; also, job loss may have a significantly detrimental effect on life satisfaction, self-esteem and on the individual’s perceived role in society. This analysis is based on a sample of married and cohabitating couples from the first 14 waves of the British Household Panel Survey. In order to correct for the possible endogeneity of job loss, data from employment histories is utilised and redundancies (different from dismissals) in declining industries are used as an indicator of exogenous job loss. Results show evidence that couples in which the husband experiences a job loss are more likely to experience poor mental health.     

Working for Peanuts: Nonstandard Work and Food Insecurity Across Household Structure

This study investigates the relationship between household head’s work form (by considering number of hours worked and multiple job holding) and household food insecurity utilizing the Food Security Supplement to the Current Population Survey. Households where the head is employed in multiple jobs, in work with varied hours, or part-time work are more likely to be food insecure than households with a head in a regular full-time job, even when controlling for income and other social demographic characteristics. Models are estimated separately for married couple, cohabiting, male-headed, female-headed and single-person households to show the interaction between work form and household structure. The relationship between food insecurity and nonstandard work arrangements may be due to unstable incomes and complex schedules.     

The Role of Job Insecurity in Explanations of Racial Health Inequalities

The literature documenting substantial health differences for racial minorities in the United States is well developed and has considered a multitude of explanations for such disparities. However, the literature seldom addresses the health effects for racial minorities produced in the workplace. This study bridges these two literatures in order to understand the mediating role of job insecurity in explanations of racial health disparities. Our central argument is that racial differences in job insecurity resulting from the marginalized labor market positions of racial minorities are partially responsible for racial disparities in health. This study utilizes adjacent category and partial adjacent category logit models of general health using data from the 2000 to 2010 General Social Survey in order to test this claim. Overall, the results from this study indicate that there are substantial racial differences in job insecurity, and both race and job insecurity are important predictors of general self‐rated health. Additionally, racial differences in job insecurity help explain a portion of the racial disparities in health. We conclude with a discussion of the implications for the study of health disparities in the United States.     

Family dissolution and precautionary savings: an empirical analysis

The main research question of this paper is whether or not the risk of family disruption has an impact on the consumption/saving decisions of households. Although little empirical work exists in this area, often presenting indirect evidence, the theory is divided over the effect of family risk over saving and wealth accumulation. By using data from the Italian Survey on Households Income and Wealth, we build a probabilistic model to assess the probability of marital splitting, and then we insert this probability as a distinct or interacted regressor, in a statistically consistent way, into a linear model of consumption. Furthermore, we study the differential behaviour, in terms of consumption/saving choices, of couples experiencing marital splitting over the subsequent 2?years. The main result of our analysis is that family disruption risk generates precautionary savings, reducing current consumption. In fact, according to our estimates, on average, the risk of divorce generates an amount of additional yearly precautionary savings of around 800 euros at constant prices of the year 2000, which represents 11% of overall household savings.     

The Determinants of Racial Disparities in Perceived Job Insecurity: A Test of Three Perspectives

Why do African Americans report higher levels of perceived job insecurity than whites? We analyze data from the 1996 and 1998 General Social Survey to test alternative predictions from the compositional, inclusive‐discrimination, and dispositional perspectives concerning the sources of the racial gap in perceived insecurity. Results from ordered probit regressions provide most support for the inclusive‐discrimination perspective, which maintains that employment practices associated with “modern racial prejudice” induce perceived insecurity on a widespread and generalized basis among African Americans. Accordingly, compared to whites, African Americans experience perceived insecurity net of human capital credentials and job/labor market characteristics. Additional analyses provide one qualification to these findings: dynamics associated with the inclusive‐discrimination perspective are more pronounced in the private sector than the public sector.     

Homelessness and hunger

We employ data from the National Survey of Homeless Assistance Providers and Clients to examine the character and correlates of hunger among homeless people. Our analysis, couched in an adaptation framework, finds more support for the differentiation hypothesis than for the leveling hypothesis: Complex patterns of food insecurity exist at the individual level, and they vary with the resources available (e.g., higher monthly income, regular shelter use) and obstacles faced (e.g., alcohol, drug, and physical and mental health problems). The chronically homeless, who suffer from multiple deficits, appear particularly food-insecure, a finding that favors the desperation hypothesis over its street-wisdom alternative. We conclude that hunger is not uniformly experienced by members of the homeless population. Rather, some individuals are better situated than others to cope with the stressful nature of homelessness when addressing their sustenance needs.     

The association between job insecurity and engagement of employees at work

This study examined the association between employees’ perceived job insecurity and employee engagement. Using Gallup-Sharecare Well-Being Index (2008–2014) data, we applied logistic regressions to examine the association between job insecurity and engagement, controlling for covariates. The job insecurity variable was also interacted with the supervisor support variable. We found that perceived job insecurity was associated with reduced engagement and that this may be moderated by supervisor support. This is the first study using nationally representative data to examine the role of supervisor support in mitigating the negative impact of job insecurity on engagement.     

JOB INSECURITY,STRESS AND GENDER

This study examined the complex relationships between gender, job insecurity and job-related stress. Previous findings have suggested that men experience greater job insecurity than women, and are more vulnerable to job-related stress. The current study tested the hypothesis that the gender ideology of employees moderates the effect of gender on job insecurity and stress. Data were obtained by questionnaires from a sample of 203 married employees. The results showed that traditional men experience greater job insecurity than traditional women. However, as hypothesized, egalitarian men and women exhibited similar degrees of job insecurity. Furthermore, job insecurity in traditional men and in egalitarian men and women was related to loss of control stress, financial stress and stress expressions at home, whereas traditional women were relatively protected from job-related stress. These findings illuminate the important moderating role played by gender ideology in the relationships between gender, job insecurity and stress.     

Effects of financial insecurity on social interactions

Little is known about the effects of financial insecurity on social interactions despite consistently observed income effects on social capital and a growing recognition of the potential importance of income volatility in affecting hardships, distress, and other aspects of well-being. We use data on women participating in a longitudinal study in the U.S. to investigate the effects of financial insecurity measured along two dimensions (safety nets and hardships) on two types of social interactions (participating in community organizations and having close friends). In auxiliary analyses we explore the potential mediating effects of mental health. We find that safety nets in the form of bank accounts, credit cards, and ability to borrow money increase both participation in organizations and friendships, whereas material hardships decrease friendships but increase participation in organizations. We find no evidence that mental health, as we have measured it, mediates the observed effects of financial insecurity on social interactions, although it has strong and negative independent associations with having close friends.     

Cohabitation and Marriage in a Risky World

Different couples are analyzed in presence of income uncertainty and precautionary saving. Married couples have legal restrictions on their relationship that force them to act cooperatively, while cohabitants with limited commitment act non-cooperatively. This makes risk sharing different for different couples; married couples share risk completely, while cohabitants share risk to a lesser extent due to their lack of commitment and cooperation. This makes precautionary savings greater for cohabitants than for married couples. However, cohabitants also tend to undersave to possibly increase assistance from their partner. However, mutual altruism mitigates the inefficiencies and enforces time consistent risk sharing among cohabitants.I am thankful to Jonas Agell, Sophia Grahn-Voorneveld, Peter Kooreman and to Mats Persson for valuable comments on an earlier version. I have also received useful comments from the editor and from two anonymous referees. Generous financial support from the Jan Wallander and Tom Hedelius Foundation and from Knut and Alice Wallenbergs Foundation is gratefully acknowledged.     

PRICE LEVEL UNCERTAINTY, SAVING, AND LABOR SUPPLY

This paper derives the implications, for individual saving and labor supply, of increased uncertainty about the future price level. The framework for the analysis is a two-period model in which saving and labor supply are alternative sources of both present disutility and future income. The individual is assumed to make simultaneously his saving and labor supply decisions prior to the resolution of the uncertainty about the future price level. We find that, under theoretically plausible and empirically relevant assumptions about attitudes toward risk, an increase in future price level uncertainty increases individual saving and labor supply. These results imply that, for the economy as a whole, increased uncertainty about the future price level increases output and employment, while decreasing the real rate of interest, the present price level, and economic welfare.