IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v84y2007i1p138-154.html
   My bibliography  Save this article

Effects of longevity and dependency rates on saving and growth: Evidence from a panel of cross countries

Author

Listed:
  • Li, Hongbin
  • Zhang, Jie
  • Zhang, Junsen

Abstract

While earlier empirical studies found a negative saving effect of old-age dependency rates without considering longevity, recent studies have found that longevity has a positive effect on growth without considering old-age dependency rates. In this paper, we first justify the related yet independent roles of longevity and old-age dependency rates in determining saving and growth by using a growth model that encompasses both neoclassical and endogenous growth models as special cases. Using panel data from a recent World Bank data set, we then find that the longevity effect is positive and the dependency effect is negative in savings and investment regressions. The estimates indicate that the differences in the demographic variables across countries or over time can well explain the differences in aggregate savings rates. We also find that both population age structure and life expectancy are important contributing factors to growth.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Li, Hongbin & Zhang, Jie & Zhang, Junsen, 2007. "Effects of longevity and dependency rates on saving and growth: Evidence from a panel of cross countries," Journal of Development Economics, Elsevier, vol. 84(1), pages 138-154, September.
  • Handle: RePEc:eee:deveco:v:84:y:2007:i:1:p:138-154
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304-3878(06)00181-7
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Hongbin Li & Junsen Zhang, 2007. "Do High Birth Rates Hamper Economic Growth?," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 110-117, February.
    3. Ronald Lee & Jonathan Skinner, 1999. "Will Aging Baby Boomers Bust the Federal Budget?," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 117-140, Winter.
    4. David N. Weil, 1994. "The Saving of the Elderly in Micro and Macro Data," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 55-81.
    5. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    6. Martin Browning & Thomas F. Crossley, 2001. "The Life-Cycle Model of Consumption and Saving," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 3-22, Summer.
    7. Higgins, Matthew, 1998. "Demography, National Savings, and International Capital Flows," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 343-369, May.
    8. Adams, Nassau A, 1971. "Dependency Rates and Savings Rates: Comment," American Economic Review, American Economic Association, vol. 61(3), pages 472-475, June.
    9. Leff, Nathaniel H, 1969. "Dependency Rates and Savings Rates," American Economic Review, American Economic Association, vol. 59(5), pages 886-896, December.
    10. de la Croix, David & Licandro, Omar, 1999. "Life expectancy and endogenous growth," Economics Letters, Elsevier, vol. 65(2), pages 255-263, November.
    11. K. Vind, 1971. "Comment," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 115-115.
    12. Ram, Rati, 1982. "Dependency Rates and Aggregate Savings: A New International Cross-Section Study," American Economic Review, American Economic Association, vol. 72(3), pages 537-544, June.
    13. Orazio P. Attanasio, 1998. "Cohort Analysis of Saving Behavior by U.S. Households," Journal of Human Resources, University of Wisconsin Press, vol. 33(3), pages 575-609.
    14. Bloom, David E & Williamson, Jeffrey G, 1998. "Demographic Transitions and Economic Miracles in Emerging Asia," World Bank Economic Review, World Bank Group, vol. 12(3), pages 419-455, September.
    15. Gupta, Kanhaya L, 1971. "Dependency Rates and Savings Rates: Comment," American Economic Review, American Economic Association, vol. 61(3), pages 469-471, June.
    16. Davies, James B, 1981. "Uncertain Lifetime, Consumption, and Dissaving in Retirement," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 561-577, June.
    17. N. Kaldor, 1971. "A Comment," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 45-46.
    18. Leff, Nathaniel H, 1973. "Dependency Rates and Savings Rates: Reply," American Economic Review, American Economic Association, vol. 63(1), pages 234-234, March.
    19. Nils-Petter Lagerlöf, 2003. "From Malthus to Modern Growth: Can Epidemics Explain the Three Regimes?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 755-777, May.
    20. Ohtake, F. & Horioka, C.Y., 1995. "Saving Motives in Japan," ISER Discussion Paper 0392, Institute of Social and Economic Research, Osaka University.
    21. Charles Yuji Horioka, 2000. "A Cointegration Analysis of the Impact of the Age Structure of the Population on the Household Saving Rate in Japan," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 511-516, August.
    22. Ram, Rati, 1984. "Dependency Rates and Savings: Reply," American Economic Review, American Economic Association, vol. 74(1), pages 234-237, March.
    23. Buse, A., 1979. "Goodness-of-fit in the seemingly unrelated regressions model : A generalization," Journal of Econometrics, Elsevier, vol. 10(1), pages 109-113, April.
    24. Ehrlich, Isaac & Lui, Francis T, 1991. "Intergenerational Trade, Longevity, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1029-1059, October.
    25. Allen Kelley & Robert Schmidt, 1995. "Aggregate population and economic growth correlations: The role of the components of demographic change," Demography, Springer;Population Association of America (PAA), vol. 32(4), pages 543-555, November.
    26. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
    27. John Thornton, 2001. "Age Structure and the Personal Savings Rate in the United States, 1956–1995," Southern Economic Journal, Southern Economic Association, vol. 68(1), pages 166-170, July.
    28. Kelley, Allen C. & Schmidt, Robert M., 1995. "Aggregate Population and Economic Growth Correlations: The Role of the Components of Demographic Change," Working Papers 95-37, Duke University, Department of Economics.
    29. Edwards, Sebastian, 1996. "Why are Latin America's savings rates so low? An international comparative analysis," Journal of Development Economics, Elsevier, vol. 51(1), pages 5-44, October.
    30. Robert Summers & Alan Heston, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 327-368.
    31. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    32. Skinner, Jonathan, 1985. "The Effect of Increased Longevity on Capital Accumulation," American Economic Review, American Economic Association, vol. 75(5), pages 1143-1150, December.
    33. Bo[dieresis]s, Dieter & von Weizsa[dieresis]cker, Robert K., 1989. "Economic consequences of an aging population," European Economic Review, Elsevier, vol. 33(2-3), pages 345-354, March.
    34. David M. Cutler & James M. Poterba & Louise M. Sheiner & Lawrence H. Summers, 1990. "An Aging Society: Opportunity or Challenge?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 1-74.
    35. repec:fth:harver:1490 is not listed on IDEAS
    36. Leff, Nathaniel H, 1971. "Dependency Rates and Savings Rates: Reply," American Economic Review, American Economic Association, vol. 61(3), pages 476-480, June.
    37. Gersovitz, Mark, 1983. "Savings and Nutrition at Low Incomes," Journal of Political Economy, University of Chicago Press, vol. 91(5), pages 841-855, October.
    38. Goldberger, Arthur S, 1973. "Dependency Rates and Savings Rates: Further Comment," American Economic Review, American Economic Association, vol. 63(1), pages 232-233, March.
    39. Ronald Lee & Shripad Tuljapurkar, 1997. "Death and Taxes: Longer life, consumption, and social security," Demography, Springer;Population Association of America (PAA), vol. 34(1), pages 67-81, February.
    40. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:84:y:2007:i:1:p:138-154. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/devec .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.