Impact of COVID-19 on the Saving Decision Under Income Uncertainty among Self-employed in Saudi Arabia:

the Precautionary Saving Theory

  • Hussain M. A. AlObaid King Khalid University (Saudi Arabia),

Résumé

The pandemic COVID-19 has brought the world to a standstill. Under these circumstances, where the
future is nearly unpredictable, the global financial and economic market is experiencing unprecedented
effects. In the wake of such uncertainty, this study investigates precautionary saving trends among selfemployed
households that are affected socially and financially by the pandemic of COVID-19 in Saudi
Arabia. Using Saudi Self-employment Saving and Spending Survey (SSSSS), we estimate whether
precautionary saving induced by uncertainty regarding future income affects individuals differently
depending on different demographic characteristics. Previous researches point to contradictory results
regarding precautionary saving theory; however, this study attempts to study precautionary saving trends
under the unique situation presented by COVID-19. Results indicate that gender and non-gender determinants
motivate the self-employed to save more during a pandemic which provides a direct measure of precautionary
saving and indicates how the self-employed respond to heightened uncertainty about their future income. The
main contribution of this study is to the literature on the effect the current pandemic has on self-employed
workers in Saudi Arabia with respect to future income uncertainty that may affect future generations.

Publiée
2021-01-06