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Demographic Determinants of Savings: Estimating and Interpreting the Aggregate Association in Asia

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  • T. Paul Schultz

    () (Economic Growth Center, Yale University)

Abstract

Life cycle savings is proposed as one explanation for much of the increase in savings and economic growth in Asia. The association between the age composition of a nation's population and its savings rate, observed within 16 Asian countries from 1952 to 1992, is re-estimated here to be less than a quarter the size reported in a seminal study, which assumed lagged savings is exogenous. Specification tests as well as common sense imply, moreover, that lagged savings is likely to be endogenous, and when estimated accordingly there remains no significant dependence of savings on the age composition, measured in several ways. Research should consider lifetime savings as a substitute for children, and model the causes for the decline in fertility which changes the age compositions and could thereby account for savings and growth in Asia.

Suggested Citation

  • T. Paul Schultz, 2004. "Demographic Determinants of Savings: Estimating and Interpreting the Aggregate Association in Asia," Working Papers 901, Economic Growth Center, Yale University.
  • Handle: RePEc:egc:wpaper:901
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    References listed on IDEAS

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    Cited by:

    1. Baker Matthew J. & George Lisa M, 2010. "The Role of Television in Household Debt: Evidence from the 1950's," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-38, May.
    2. P. C. Albuquerque, 2015. "Demographics and the Portuguese economic growth," Working Papers Department of Economics 2015/17, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    3. Arlette Campbell White & Thomas W. Merrick & Abdo S. Yazbeck, 2006. "Reproductive Health—The Missing Millennium Development Goal : Poverty, Health, and Development in a Changing World," World Bank Publications, The World Bank, number 7116, January.
    4. Yazeed Abdul Mumin & Abubakari Razak & Paul Bata Domanban, 2013. "Analysis of Household Heads? Decision-To-Save with Financial Institutions in Ghana," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(11), pages 1466-1478, November.
    5. repec:pab:rmcpee:v:24:y:2018:i:1:p:292-339 is not listed on IDEAS
    6. Choudhry, Misbah T. & Elhorst, J. Paul, 2010. "Demographic transition and economic growth in China, India and Pakistan," Economic Systems, Elsevier, vol. 34(3), pages 218-236, September.
    7. Barry Bosworth & Gabriel Chodorow-Reich, 2007. "Saving and Demographic Change: The Global Dimension," Working Papers, Center for Retirement Research at Boston College wp2007-02, Center for Retirement Research, revised Feb 2007.
    8. Ravallion, Martin, 2005. "On the contribution of demographic change to aggregate poverty measures for the developing world," Policy Research Working Paper Series 3580, The World Bank.

    More about this item

    Keywords

    Life Cycle Savings; Aging; Asian Growth; Demographic Transition;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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