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Do Wealthier Households Save More? The Impact of the Demographic Factor

Author Info

Listed author(s):
  • Belke, Ansgar H.

    ()

    (University of Duisburg-Essen)

  • Dreger, Christian

    ()

    (DIW Berlin)

  • Ochmann, Richard

    ()

    (DIW Berlin)

Abstract

This paper investigates the relationship between wealth, ageing and saving behaviour of private households by using pooled cross sections of German consumption survey data. Different components of wealth are distinguished, as their impact on the savings rate is not homogeneous. On average, the effect attributed to real estate dominates the other components of wealth. In addition, the savings rate strongly responds to demographic trends. Besides the direct impact of the age structure, an indirect effect arises through the accumulation of wealth. The savings rate does not decrease with age in a monotonic way, as the permanent income hypothesis suggests. Most prominently, older households tend to increase their savings in the second half of their retirement period, probably due to bequest motives and increasing immobility. Given the ongoing demographic trend, an increase of 1.4 percentage points in the aggregated savings rate should be expected over the next two decades.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6567.

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Length: 22 pages
Date of creation: May 2012
Publication status: published in: International Economics and Economic Policy, 2015, 12, 163-173
Handle: RePEc:iza:izadps:dp6567
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Keywords: demographic change; wealth; savings;

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Find related papers by JEL classification:
  • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
  • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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  1. Martin Browning & Annamaria Lusardi, 1996. "Household Saving: Micro Theories and Micro Facts," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1797-1855, December.
  2. Christian Dreger & Hans-Eggert Reimers, 2012. "The long run relationship between private consumption and wealth: common and idiosyncratic effects," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(1), pages 21-34, April.
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  5. Belke, Ansgar & Dreger, Christian, 2011. "Current account imbalances in the euro area: Catching up or competitiveness?," Discussion Papers 297, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
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  15. Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
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  22. Martin Beznoska & Richard Ochmann, 2013. "The interest elasticity of household savings: a structural approach with German micro data," Empirical Economics, Springer, vol. 45(1), pages 371-399, August.
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Cited by:

  1. Christian Dreger, 2017. "Long Term Growth Perspectives in Japan and the Euro Area," Discussion Papers of DIW Berlin 1661, DIW Berlin, German Institute for Economic Research.
  2. Belke, Ansgar, 2013. "Impact of a Low Interest Rate Environment - Global Liquidity Spillovers and the Search-for-yield," Ruhr Economic Papers 429, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  3. repec:spr:eurasi:v:4:y:2014:i:1:p:3-30 is not listed on IDEAS
  4. repec:spr:pharme:v:4:y:2014:i:1:p:3-30 is not listed on IDEAS
  5. Bussolo,Maurizio & Simone,Schotte & Matytsin,Mikhail, 2015. "Population aging and households? saving in the Russian Federation," Policy Research Working Paper Series 7443, The World Bank.
  6. Ansgar Belke, 2013. "Impact of a Low Interest Rate Environment - Global Liquidity Spillovers and the Search-for-yield," Ruhr Economic Papers 0429, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Alfredo Schclarek & Mauricio Caggia, 2015. "Household Saving and Labor Informality: The Case of Chile," IDB Publications (Working Papers) 89359, Inter-American Development Bank.
  8. repec:zbw:rwirep:0429 is not listed on IDEAS
  9. Zaharia Marian & Babucea Ana-Gabriela & Bălăcescu Aniela, 2015. "Dynamics And Their Determinants In Household Deposits In Lei. Case Of Romania After The Financial Crisis Of 2008," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 237-240, December.

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