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Cohort Analysis of Saving Behavior by U.S. Households

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  • Orazio P. Attanasio

Abstract

The aim of this paper is to shed some light in the decline in personal saving rates in the United States in the 1980s. For a such a purpose the paper analyses the only U.S. data set containing information on consumption and income at the household level: the Consumer Expenditure Surveys (CEX) from 1980 to 1991. Because the CEX is not a panel, most of the analysis is conducted using average cohort techniques. The paper identifies a "typical age profile" for saving rates. Such a profile is "hump shaped" and peaks around age 57. The paper also argues that such a profile was "shifted down" for the cohorts born between 1920 and 1939 relative to the younger and older cohorts considered. These cohorts are the parents of the baby boom generation. The paper also argues that these "cohort effects" can account for a nonneglible proportion of the decline in aggregate saving because these cohorts were, during the 1980s, in the ages when saving rates are typically highest. The result is robust to the consideration of several controls and holds for several definitions of consumption. The only exception is when durable expenditure is considered as saving rather than consumption.

Suggested Citation

  • 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.
  • Handle: RePEc:uwp:jhriss:v:33:y:1998:i:3:p:575-609
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    References listed on IDEAS

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    1. Kenneth A. Couch & Thomas A. Dunn, 1997. "Intergenerational Correlations in Labor Market Status: A Comparison of the United States and Germany," Journal of Human Resources, University of Wisconsin Press, vol. 32(1), pages 210-232.
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    4. Mary Corcoran & Roger Gordon & Deborah Laren & Gary Solon, 1992. "The Association between Men's Economic Status and Their Family and Community Origins," Journal of Human Resources, University of Wisconsin Press, vol. 27(4), pages 575-601.
    5. Menchik, Paul L, 1979. "Inter-generational Transmission of Inequality: An Empirical Study of Wealth Mobility," Economica, London School of Economics and Political Science, vol. 46(184), pages 349-362, November.
    6. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, pages 393-408.
    7. Gottschalk, Peter, 1996. "Is the correlation in welfare participation across generations spurious?," Journal of Public Economics, Elsevier, pages 1-25.
    8. Colin Cameron, A. & Windmeijer, Frank A. G., 1997. "An R-squared measure of goodness of fit for some common nonlinear regression models," Journal of Econometrics, Elsevier, vol. 77(2), pages 329-342, April.
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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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