The Links between Saving Rates, Income and Uncertainty: An Analysis based on the 2011 Household Budget Survey

Abstract

[eng] Using data from the 2010-2011 Insee Household Budget Survey (enquete Budget de famille), the article examines the links between the saving rate of French households and their income. It shows that the saving rate of the richest households increases with permanent income: they save more over their lifecycle. In addition, the empirical analysis makes it possible to identify and quantify a precautionary motive linked to the risk of unemployment: the precautionary motive leads to a surplus of savings flows of approximately 6.4% for working households. Furthermore, the proportion of precautionary wealth linked to uncertainty over future income is comparable, around 6.3% of overall wealth. Finally, the significance of the precautionary motive depends on the level of income, following an inverted U shaped curve: it is almost twice as strong for households in the third and fourth quintiles than for the extreme income quintiles.