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Demographic Determinants of Savings: Estimating and Interpreting the Aggregate Association in Asia

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  • Schultz, T. Paul

    ()
    (Yale University)

Abstract

Life cycle savings is proposed as one explanation for much of the increase in savings and economic growth in Asia. The association between the age composition of a nation’s population and its savings rate, observed within 16 Asian countries from 1952 to 1992, is reestimated here to be less than a quarter the size reported in a seminal study, which assumed lagged savings is exogenous. Specification tests as well as common sense imply, moreover, that lagged savings is likely to be endogenous, and when estimated accordingly there remains no significant dependence of savings on the age composition, measured in several ways. Research should consider lifetime savings as a substitute for children, and model the causes for the decline in fertility which changes the age compositions and could thereby account for savings and growth in Asia.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1479.

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Length: 39 pages
Date of creation: Jan 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1479

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Keywords: life cycle savings; aging; Asian growth; demographic transition;

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References

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  1. Leff, Nathaniel H, 1969. "Dependency Rates and Savings Rates," American Economic Review, American Economic Association, vol. 59(5), pages 886-96, December.
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  13. Angus Deaton, 2005. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 1-19, February.
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Cited by:
  1. Matthew J. Baker & Lisa M. George, 2009. "The Role of Television in Household Debt: Evidence from the 1950's," Hunter College Department of Economics Working Papers 427, Hunter College: Department of Economics.
  2. Barry Bosworth & Gabriel Chodorow-Reich, 2007. "Saving and Demographic Change: The Global Dimension," Working Papers, Center for Retirement Research at Boston College wp2007-02, Center for Retirement Research, revised Feb 2007.
  3. Choudhry, Misbah T. & Elhorst, J. Paul, 2010. "Demographic transition and economic growth in China, India and Pakistan," Economic Systems, Elsevier, vol. 34(3), pages 218-236, September.
  4. Arlette Campbell White & Thomas W. Merrick & Abdo S. Yazbeck, 2006. "Reproductive Health—The Missing Millennium Development Goal : Poverty, Health, and Development in a Changing World," World Bank Publications, The World Bank, number 7116, January.
  5. Ravallion, Martin, 2005. "On the contribution of demographic change to aggregate poverty measures for the developing world," Policy Research Working Paper Series 3580, The World Bank.

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