Precautionary Saving from Different Sources of Income : Evidence from Rural Pakistan

Precautionary Saving from Different Sources of Income : Evidence from Rural Pakistan

Few studies have tried to measure how households in a developing country save from each of the different income sources at their disposal. To help fill that gap, the Author uses five-year panel data to examine how households in rural Pakistan save...

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Bibliographic Details
Main Author: Adams, Richard H., Jr.
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2013
Subjects:
SAVINGS BEHAVIOR
HOUSEHOLD INCOME
RURAL AREAS
RURAL CREDIT
INCOME GAPS
MARGINAL COSTS
REMITTANCES
RENTAL PROPERTY
PRECAUTIONARY PRINCIPLE
INCOME VARIABILITY
CAPITAL-OUTPUT RATIO
CREDIT MARKETS AVERAGE RATE
BASE YEAR
CAPITAL INVESTMENT
CONSUMPTION EXPENDITURE
CONSUMPTION FUNCTION
CONSUMPTION GROWTH
DATA SET
DATA SETS
DEVELOPING COUNTRIES
DEVELOPMENT ECONOMICS
DURABLE GOODS
ECONOMIC DEVELOPMENT
ECONOMIC RESEARCH
ECONOMIC REVIEW
ECONOMIC STUDIES
EMPIRICAL RESULTS
EMPIRICAL STUDIES
EMPLOYMENT
EQUATIONS
EXPECTED UTILITY
EXPENDITURES
FARM INCOME
FOOD POLICY RESEARCH
GROWTH RATE
HETEROSKEDASTICITY
HOUSEHOLD DATA
HOUSEHOLD LEVEL
HOUSEHOLD MEMBERS
HOUSEHOLD SURVEY
HOUSEHOLD SURVEYS
HUMAN CAPITAL
INCOME
INCOME COMPONENTS
INCOME DISTRIBUTION
INCOME GROUPS
INCOME INEQUALITY
INCOME QUINTILES
INCOME SOURCE
INCOME SOURCES
INCOMES
INFLATION
INVESTMENT OPPORTUNITIES
LINEAR RELATIONSHIP
MARGINAL PROPENSITY TO CONSUME
MARGINAL PROPENSITY TO SAVE
MARGINAL UTILITY
MEASUREMENT ERROR
MEASUREMENT ERRORS
MEASUREMENT PROBLEMS
MPC
MPS
0 HYPOTHESIS
PERMANENT INCOME
PERMANENT INCOME HYPOTHESIS
POLITICAL ECONOMY
POSITIVE RELATIONSHIP
POVERTY REDUCTION
PRIVATE SECTOR
PRIVATE SECTOR EMPLOYMENT
REAL RATE
REAL RATE OF INTEREST
REGRESSION ANALYSIS
RISK AVERSION
RURAL HOUSEHOLDS
SAVINGS
SIGNIFICANT DIFFERENCES
SURVEY DATA
UNDERESTIMATES
VALUATION
WEALTH
WEIGHTED AVERAGE
Online Access:http://documents.worldbank.org/curated/en/2002/01/1687154/precautionary-saving-different-sources-income-evidence-rural-pakistan
http://hdl.handle.net/10986/15752
Description
Summary:Few studies have tried to measure how households in a developing country save from each of the different income sources at their disposal. To help fill that gap, the Author uses five-year panel data to examine how households in rural Pakistan save from each of the seven separate sources of income. The author finds that households save from different sources of income at significantly different marginal rates. For example, the marginal propensity to save from external remittances (0.711) is much higher than that for rental income (0.085). As the precautionary model of saving suggests, the reasons for this relate to uncertainty: income that is more variable, tends to be saved at a higher marginal rate. Faced with incomplete capital, and credit markets, households in rural Pakistan save: for a rainy day" by putting away mainly those sources of income that are more variable, and uncertain.

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