Dynastic Precautionary Savings

Abstract This article documents that parents accumulate savings to insure their children against income risk. I refer this behaviour as dynastic precautionary saving. Using a sample of matched parent–child pairs from the Panel Study Income Dynamics, test for by examining response parental consumption child’s permanent uncertainty. exploit variation in risk across age and industry–occupation groups confirm that, all else equal, higher uncertainty depresses consumption, indicating saving motive generations.