Increase in Saving Rate and Precautionary Saving Motive in Japan(in Japanese)

This paper analyzes some of the reasons why Japan's savings rate rose in the 1990s. Both the savings rate and unemployment rate increased in the 1990s, but the growth rate of disposable income decreased in the latter half of the 1990s. The evidence implies that an increase in the savings rate is intuitively explained by a precautionary savings motive. Previous studies find that the savings rate rose as income risks increased, and conclude that a precautionary savings motive was at least partly responsible. An increase in income risk means that employee expectations of future income become more uncertain; that is, the variance of expected growth rate of real disposable income using the Carlson-Parkin (1975, Economica vol. 42, pp. 123-138) method increases. We reinvestigate this evidence, and find that the correlation between the savings rate of employee (using data from the Family Income and Expenditure Survey) and income risk is significantly positive during the full sample period (from 1976 to 1998), but not significantly positive after 1986, excluding two oil crises. We therefore conclude that the increase in Japan's saving rate in the 1990s is not explained by a precautionary saving motive with an increase in income risk. In our test, however, a precautionary savings motive is by no means rejected. We use an employment risk to explain movements in the savings rate. We define the mean of the expected unemployment rate (or active job openings ratio) using the Carlson-Parkin method as the employment risk. We estimate the regression of the savings rate on the employment risk and other factors. We find that the correlation between the savings rate and employment risk is significantly positive during the sample period (after 1986). We thus conclude that the increase in the savings rate in the 1990s is explained by a precautionary savings motive with employment risk. By that we mean: The savings rate increased not because the future income of employees became more uncertain (very high or very low), but because their possibility of unemployment strengthened.