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Population Dynamics and Household Saving: Evidence from the Philippines

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  • Mapa, Dennis S
  • Bersales, Lisa Grace S

Abstract

The economic growth implications due to changes in the nation’s age structure have been substantial. In the course of the demographic transition, countries experience an increasing share of the working age population relative to the total population and this creates favorable effects on economic growth. The changing age structure also influences household saving rate. This paper looks at the role of the slow demographic transition in the Philippines to its aggregate household saving rate using panel data from the Family Income and Expenditure Survey (1985 to 2003). It is known for a fact that household saving rate in the Philippines is one of the lowest in East Asia. The econometric model is based on the augmented life cycle model and the results suggest that the country’s population dynamics plays an important role in its household saving rate. The Philippines rapid population growth creates a big bulge in the lower portion of the age pyramid that resulted in a higher percentage of young dependents. This suggests that the country is paying a high price for its high population growth resulting to low saving rate and consequently, low economic growth. The results also show that remittance from migrant workers is a major source of aggregate household saving.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 21245.

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Date of creation: Dec 2008
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Publication status: Published in The Philippine Statistician 1-4.57(2008): pp. 1-27
Handle: RePEc:pra:mprapa:21245

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Keywords: Demographic Transition; Saving Rate;

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References

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  1. repec:phd:dpaper:pjd_2006_vol._xxxiii_nos._1and2-b is not listed on IDEAS
  2. Robert M. Schmidt & Allen C. Kelley, 1996. "Saving, dependency and development," Journal of Population Economics, Springer, Springer, vol. 9(4), pages 365-386.
  3. Charles Yuji Horioka & Junmin Wan, 2007. "The determinants of household saving in China: a dynamic panel analysis of provincial data," Working Paper Series, Federal Reserve Bank of San Francisco 2007-28, Federal Reserve Bank of San Francisco.
  4. Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 641-80, August.
  5. Bloom, David E & Williamson, Jeffrey G, 1998. "Demographic Transitions and Economic Miracles in Emerging Asia," World Bank Economic Review, World Bank Group, World Bank Group, vol. 12(3), pages 419-55, September.
  6. Browning, Martin & Deaton, Angus & Irish, Margaret, 1985. "A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle," Econometrica, Econometric Society, Econometric Society, vol. 53(3), pages 503-43, May.
  7. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  8. David E. Bloom & David Canning & Bryan Graham, 2002. "Longevity and Life Cycle Savings," NBER Working Papers 8808, National Bureau of Economic Research, Inc.
  9. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 78(243), pages 375-80, December.
  10. Modigliani, Franco, 1985. "Life Cycle, Individual Thrift and the Wealth of Nations," Nobel Prize in Economics documents, Nobel Prize Committee 1985-1, Nobel Prize Committee.
  11. Paxson, Christina, 1996. "Saving and growth: Evidence from micro data," European Economic Review, Elsevier, Elsevier, vol. 40(2), pages 255-288, February.
  12. Andrew Coleman, . "Household Savings: A Survey of Recent Microeconomic Theory and Evidence," Treasury Working Paper Series 98/08, New Zealand Treasury.
  13. Ronald D Lee & Andrew Mason & Tim Miller, 1998. "Saving, Wealth, and Population," Working Papers, University of Hawaii at Manoa, Department of Economics 199805, University of Hawaii at Manoa, Department of Economics.
  14. repec:phd:pjdevt:pjd_2006_vol._xxxiii_nos._1and2-b is not listed on IDEAS
  15. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "Economic Growth and the Demographic Transition," NBER Working Papers 8685, National Bureau of Economic Research, Inc.
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Cited by:
  1. Mapa, Dennis S. & Bersales, Lisa Grace S. & Albis, Manuel Leonard F. & Daquis, John Carlo P., 2011. "Determinants of Poverty in Elderly-Headed Households in the Philippines," MPRA Paper 28557, University Library of Munich, Germany.

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