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Early twentieth-century Japanese worker saving: precautionary behaviour before a social safety net


Author Info

  • John A. James

    (Department of Economics, University of Virginia, PO Box 400182, Charlottesville, VA 22904, USA)

  • Isao Suto

    (School of Economics and Political Science, Meiji University, Tokyo, Japan)


This paper pools data from independent household surveys of Japanese workers roughly spanning the Taisho period (1912–1926), a time before private-business or government-provided social safety nets. First, we construct estimates of permanent and transitory income and then estimate saving functions consistent with intertemporal optimization. The saving behaviour of Japanese worker households is in turn compared with that of American worker households before World War I, a time when they too lacked access to general social services. The estimated marginal propensities to save out of permanent and transitory incomes were quite similar for Japanese and American worker households, but the Japanese ones saved more at a given level of income. The economic environment facing Japanese workers, however, seemed to be no riskier than that facing American workers. We attribute instead this result primarily to the widespread postal savings banks in Japan which increased the convenience and decreased the risk of saving.

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Bibliographic Info

Article provided by Association Française de Cliométrie (AFC) in its journal Cliometrica, Journal of Historical Economics and Econometric History.

Volume (Year): 5 (2011)
Issue (Month): 1 (January)
Pages: 1-25

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Handle: RePEc:afc:cliome:v:5:y:2011:i:1:p:1-25

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Keywords: Social safety net; Precautionary saving; Worker surveys; Taisho era; Postal savings;

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