Increase in Saving Rate and Precautionary Saving Motive in Japan (in Japanese)

This paper analyzes the reason that Japan's household saving rate rose in the 1990s. The unemployment rate as well as saving rate of workers' households was increasing in the 1990s, and growth rate of disposable income was decreasing in the late 1990s. The evidence may imply that an increase in the saving rate is explained by precautionary saving motive among growing uncertainty (risk) concerning future income and employment. An increase in income risk means that households' expectation of future income becomes more uncertain. This paper investigates this evidence, and finds that correlation between Japan's saving rate of workers' households (using data for the Family Income and Expenditure Survey) and the income risk is significantly positive during the full sample period (from 1976 to 1998), but not significantly positive in the recent years. Therefore it is concluded that the increase in Japan's household saving rate in the 1990s is not explained by precautionary saving hypothesis with the income risk. To explain recent movements in the saving rate, this paper examines whether or not the hypothesis in any other means is supported. We find that correlation between the saving rate and the employment risk is significantly positive during the sample period (after 1986). The data on the mean of expected unemployment rate (or active job opening ratio) are newly constructed as employment risk. Thus it is concluded that the increase in household saving rate in the 1990s is explained by precautionary saving motive with the employment risk. This conclusion means that the saving rate increased because not workers' future income became more uncertain but households' possibility of unemployment strengthened. This paper also investigates the aggregate nominal precautionary saving with employment risk for workers' households. The saving (in flow term) amounted to approximately 4 trough 7 trillion yen in the late 1990s. If the employment risk could be eliminated, the Japanese workers' households spent their precautionary saving for their consumption, and the then GDP would make a further rise of 0.2-0.25%.