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Population Policies, Demographic Structural Changes, and the Chinese Household Saving Puzzle

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Author Info

  • Ge, Suqin

    ()
    (Virginia Tech)

  • Yang, Dennis T.

    ()
    (University of Virginia)

  • Zhang, Junsen

    ()
    (Chinese University of Hong Kong)

Abstract

Using combined data from population censuses and Urban Household Surveys, we study the effects of demographic structural changes on the rise in household saving in China. Variations in fines across provinces on unauthorized births under the one-child policy and in cohort-specific fertility influenced by the implementation of population control policies are exploited to facilitate identification. We find evidence that older households with a reduced number of adult children save more because of old-age security concerns, middle-aged households experience an increase in saving due to the lighter burden of dependent children, and younger households save more because of having fewer siblings to share the responsibility of parental care. These findings lend support to a simple economic model in which the effects of population control policies are investigated in the context of household saving decisions in China.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7026.

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Length: 48 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:iza:izadps:dp7026

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Keywords: household saving; one-child policy; demographic structure; cohort analysis; China;

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  1. Shang-Jin Wei & Xiaobo Zhang, 2011. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 119(3), pages 511 - 564.
  2. Yang, Dennis T. & Zhang, Junsen & Zhou, Shaojie, 2011. "Why Are Saving Rates So High in China?," IZA Discussion Papers 5465, Institute for the Study of Labor (IZA).
  3. Marcos Chamon & Eswar Prasad, 2008. "Why are Saving Rates of Urban Households in China Rising?," NBER Working Papers 14546, National Bureau of Economic Research, Inc.
  4. Avraham Ebenstein, 2010. "The "Missing Girls" of China and the Unintended Consequences of the One Child Policy," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
  5. Orazio P. Attanasio, 1993. "A Cohort Analysis of Saving Behavior by U.S. Households," NBER Working Papers 4454, National Bureau of Economic Research, Inc.
  6. Dennis Tao Yang & Dandan Chen, 2004. "Transformations in China's population policies and demographic structure," Pacific Economic Review, Wiley Blackwell, Wiley Blackwell, vol. 9(3), pages 269-290, October.
  7. Zheng Song & Kjetil Storesletten & Yikai Wang & Fabrizio Zilibotti, 2012. "Sharing High Growth Across Generations: Pensions and Demographic Transition in China," UBSCENTER - Working Papers, UBS International Center of Economics in Society - Department of Economics - University of Zurich 001, UBS International Center of Economics in Society - Department of Economics - University of Zurich.
  8. Charles Yuji Horioka & Junmin Wan, 2006. "The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data," NBER Working Papers 12723, National Bureau of Economic Research, Inc.
  9. Franco Modigliani & Shi Larry Cao, 2004. "The Chinese Saving Puzzle and the Life-Cycle Hypothesis," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 42(1), pages 145-170, March.
  10. Binkai Chen & Ming Lu & Ninghua Zhong, 2012. "Hukou and Consumption Heterogeneity: Migrants' Expenditure Is Depressed by Institutional Constraints in Urban China," Global COE Hi-Stat Discussion Paper Series, Institute of Economic Research, Hitotsubashi University gd11-221, Institute of Economic Research, Hitotsubashi University.
  11. Hongbin Li & Junsen Zhang, 2009. "Testing the External Effect of Household Behavior: The Case of the Demand for Children," Journal of Human Resources, University of Wisconsin Press, vol. 44(4).
  12. Li, Hongbin & Yi, Junjian & Zhang, Junsen, 2010. "Estimating the Effect of the One-Child Policy on Sex Ratio Imbalance in China: Identification Based on the Difference-in-Differences," IZA Discussion Papers 5149, Institute for the Study of Labor (IZA).
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