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Wage arrears uncertainty and precautionary saving in Russia

Citation

Guariglia, Alessandra & Kim, Byung-Yeon (2003). Wage arrears uncertainty and precautionary saving in Russia. Economics of Transition, 11(3), 493-512.

Abstract

Wage arrears are widespread in Russia, and are one of the main causes of uncertainty in the labour market. In this paper, we use the Russian Longitudinal Monitoring Survey over the period 1994-98 to construct a new and improved measure of household income risk, based on the uncertainty due to wage arrears. We then use this measure of uncertainty to test the precautionary saving hypothesis, according to which households save to self-insure against risk. We find significant evidence of additional saving by those households whose head is more likely to suffer from wage arrears one year hence. This suggests the existence of a strong precautionary saving motive.

URL

http://dx.doi.org/10.1111/1468-0351.00159

Reference Type

Journal Article

Year Published

2003

Journal Title

Economics of Transition

Author(s)

Guariglia, Alessandra
Kim, Byung-Yeon