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Age structure of the population and the choice of household financial assets

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  • Chenyu Kang
  • Ridong Hu

Abstract

China is undergoing changes in its demographic structure, and the burden of raising children and caring for the elderly is negatively affecting the welfare of Chinese families. Optimising the financial structure of households may be an effective solution. Using data from the 2017 Chinese Household Finance Survey, in this study, we empirically analyse how the age structure of the population affects a household’s finances by applying probit and tobit models. It was found that an increase in the proportion of infants in a family has a crowding-out effect on its investment in risky and deposit assets, and an increase in the proportion of elderly family members encourages the replacement of risky assets with savings. Further mechanism tests showed that the presence of infants affects the choice of financial assets by crowding a family’s labour or leisure time, increasing expenditures, and changing a family’s cash demand, while the presence of the elderly changes household finances because a family’s risk preferences are altered by the weakened cognitive abilities of the elderly. Finally, in this article, we advance some policy suggestions, such as regulating capital market management, increasing birth subsidies, and improving the financial literacy of the elderly, to ensure future pension security.

Suggested Citation

  • Chenyu Kang & Ridong Hu, 2022. "Age structure of the population and the choice of household financial assets," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 2889-2905, December.
    • Handle: RePEc:taf:reroxx:v:35:y:2022:i:1:p:2889-2905
    DOI: 10.1080/1331677X.2021.1984269
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    References listed on IDEAS

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    3. Yujie Wang & Run Ge & Wenjing Gao & Dunzhe Tang, 2024. "How Does Fertility Policy Relaxation Affect Household Financial Asset Allocation? Evidence from the Universal Two-Child Policy in China," Sustainability, MDPI, vol. 16(3), pages 1-23, January.
    4. Yao, Min & Liu, Lei, 2025. "Does population aging aggravate energy poverty: An examination of clean cooking fuel choice in rural China," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 210-230.

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