Precautionary Saving and Endogenous Labor Supply with and without Intertemporal Expected Utility |
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| Authors: | DIEGO NOCETTI WILLIAM T SMITH |
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| Institution: | 1. Diego Nocetti is Assistant Professor of Economics and Financial Studies, School of Business, Clarkson University (E‐mail: dnocetti@clarkson.edu).;2. William T. Smith is Professor of Economics, Department of Economics, The University of Memphis (E‐mail: wtsmith@memphis.edu). |
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| Abstract: | We analyze precautionary saving behavior in a framework with labor and nonlabor income risks, an endogenous supply of labor, and a representation of preferences that disentangles attitudes toward risk, attitudes toward intertemporal substitution, and ordinal preferences for consumption and leisure. This preference structure allows us to disentangle and to describe in an intuitive way the different forces that determine precautionary saving “in the small” and “in the large.” |
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| Keywords: | D91 E21 J22 precautionary saving wage uncertainty labor supply multivariate risk aversion intertemporal substitution |
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