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Life-Cycle Income Hypothesis And Demographic Structure: A Semi-Nonparametric Analysis Using A Panel Of Countries

Author

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  • CHEOLBEOM PARK

    (Department of Economics, Korea University, Anam-dong, Seongbuk-gu, Seoul, Republic of Korea 136-701, Republic of Korea)

  • JINA YU

    (Broadcasting & Spectrum Policy Research Division, Korea Information Society Development Institute (KISDI), 38 Youngmeori 2 gil (1-1 Juam-dong), Gwacheon-si, Gyeonggi-do, Republic of Korea 427-710, Republic of Korea)

Abstract

In this paper, we attempt to determine whether the life-cycle income (LCI) hypothesis can explain movements in the national savings rate using the panel data of countries and the semi-nonparametric approach. While relating movements in the population density function to movements in the national savings rate, we are able to estimate the age response function with a high level of precision, and the estimated age response function is hump-shaped, which is generally consistent with the prediction from the LCI hypothesis. Running time-series regressions separately for individual countries, we also demonstrate that the estimated age response functions are consistent with the LCI hypothesis in a large proportion of countries, despite limited observations in a variety of countries. Finally, our time-series and cross-sectional analysis results imply that the LCI hypothesis is more likely to hold in a country wherein the growth rate of per capita GDP and the growth rate of population are high.

Suggested Citation

  • Cheolbeom Park & Jina Yu, 2013. "Life-Cycle Income Hypothesis And Demographic Structure: A Semi-Nonparametric Analysis Using A Panel Of Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 58(01), pages 1-18.
    • Handle: RePEc:wsi:serxxx:v:58:y:2013:i:01:n:s0217590813500033
    DOI: 10.1142/S0217590813500033
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    References listed on IDEAS

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    1. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
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    More about this item

    Keywords

    Age distribution; Fourier flexible form; life-cycle income hypothesis; semi-nonparametric regression; series estimation; E21; D91; C14;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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