Consumption Smoothing among Working-Class American Families Before Social211 Insurance

摘要

This paper examines whether the saving decisions of a large sample of working-211u001eclass American families around the turn of the twentieth century are consistent 211u001ewith consumption smoothing tendencies in the spirit of the permanent income 211u001ehypothesis. We develop two econometric models to decompose reported annual 211u001eincomes from micro-data into expected and unexpected components, then we estimate 211u001emarginal propensities to save out of each component of income. The two 211u001emethodologies deliver similar regression estimates and reveal empirical patterns 211u001econsistent to those reported in other recent research based on quite different 211u001econtemporary household data. Marginal propensities to save out of unexpected 211u001eincome shocks are large relative to propensities based on expected income 211u001emovements, though the former lie much below one and the latter much above zero. 211u001eWhile these data reject strict parameterizations of the permanent income 211u001ehypothesis, we nonetheless conclude that families saving decisions in the 211u001ehistorical period look quite modern.