This paper analyzes the reason that Japan’s household saving rate rose in the 1990s. The unemployment rate as well as saving rate of workers’ households was increasing in the 1990s, and growth rate of disposable income was decreasing in the late 1990s. The evidence may imply that an increase in the saving rate is explained by precautionary saving motive among growing uncertainty (risk) concerning future income and employment. An increase in income risk means that households’ expectation of future income becomes more uncertain. This paper investigates this evidence, and finds that correlation between Japan’s saving rate of workers’ households (using data for the Family Income and Expenditure Survey) and the income risk is significantly positive during the full sample period (from 1976 to 1998), but not significantly positive in the recent years. Therefore it is concluded that the increase in Japan’s household saving rate in the 1990s is not explained by precautionary saving hypothesis with the income risk.
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Publisher Info
Paper provided by East Asian Bureau of Economic Research in its series Macroeconomics Working Papers with number
474.
Length: 41 pages Date of creation: Mar 2004 Date of revision: Handle: RePEc:eab:macroe:474
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Find related papers by JEL classification: H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
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