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Do the Rich Save More in Canada?

Author

Listed:
  • Sule Alan
  • Kadir Atalay
  • Thomas F. Crossley

Abstract

This paper is an attempt to answer the long standing question of whether households with higher lifetime income save a larger fraction of their income. The major difficulty in empirically assessing the relationship between lifetime incomes and saving rates is to construct a credible proxy for lifetime income. The Canadian Family Expenditure Survey (FAMEX) provides us with both unusually good data on savings rates and potential instruments with which we can construct reliable lifetime income proxies. Our empirical analysis suggests that the estimated relationship between saving rates and lifetime incomes is sensitive to the instrument used to proxy lifetime income. Nevertheless, our preferred estimates indicate that, except for poorest households (who simply do not save), saving rates do not differ substantially across lifetime income groups.

Suggested Citation

  • Sule Alan & Kadir Atalay & Thomas F. Crossley, 2006. "Do the Rich Save More in Canada?," Quantitative Studies in Economics and Population Research Reports 406, McMaster University.
    • Handle: RePEc:mcm:qseprr:406
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    Cited by:

    1. Antoine Bozio & Carl Emmerson & Cormac O'Dea & Gemma Tetlow, 2013. "Savings and wealth of the lifetime rich: evidence from the UK and US," IFS Working Papers W13/30, Institute for Fiscal Studies.
    2. Masahiro Hori & Koichiro Iwamoto & Takeshi Niizeki & Fumihiko Suga, 2016. "Do the Rich Save More in Japan? Evidence Based on two Micro Data Sets for the 2000s," The Japanese Economic Review, Springer, vol. 67(4), pages 474-494, December.
    3. Néstor Gandelman, 2015. "A Comparison of Saving Rates: Micro Evidence from Seventeen Latin American and Caribbean Countries," IDB Publications (Working Papers) 90556, Inter-American Development Bank.
    4. Bertrand Garbinti & Pierre Lamarche, 2014. "Les hauts revenus épargnent‑ils davantage ?," Économie et Statistique, Programme National Persée, vol. 472(1), pages 49-64.
    5. Rowena Crawford & Andrew Hood, 2015. "A tale of three distributions: inheritances, wealth and lifetime income," IFS Working Papers W15/14, Institute for Fiscal Studies.
    6. Gandelman, Néstor, 2015. "A Comparison of Saving Rates: Micro Evidence from Seventeen Latin American and Caribbean Countries," IDB Publications (Working Papers) 7136, Inter-American Development Bank.
    7. Sule Alan & Kadir Atalay & Thomas F. Crossley, 2006. "Do the Rich Save More in Canada?," Quantitative Studies in Economics and Population Research Reports 406, McMaster University.
    8. B. Garbinti & P. Lamarche, 2014. "Do the High-Income Households Save More?," Documents de Travail de l'Insee - INSEE Working Papers g2014-10, Institut National de la Statistique et des Etudes Economiques.
    9. Nestor Gandelman, "undated". "A comparison of saving rates: micro evidence from sixteen Latin American andCaribbean countries," Documentos de Investigación 101, Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales.
    10. Néstor Gandelman, 2017. "Do the rich save more in Latin America?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 75-92, March.

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    More about this item

    Keywords

    saving rates; lifetime income; permanent income;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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