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Population Dynamics and Household Saving: Evidence from the Philippines

  • Mapa, Dennis S
  • Bersales, Lisa Grace S

The economic growth implications due to changes in the nation’s age structure have been substantial. In the course of the demographic transition, countries experience an increasing share of the working age population relative to the total population and this creates favorable effects on economic growth. The changing age structure also influences household saving rate. This paper looks at the role of the slow demographic transition in the Philippines to its aggregate household saving rate using panel data from the Family Income and Expenditure Survey (1985 to 2003). It is known for a fact that household saving rate in the Philippines is one of the lowest in East Asia. The econometric model is based on the augmented life cycle model and the results suggest that the country’s population dynamics plays an important role in its household saving rate. The Philippines rapid population growth creates a big bulge in the lower portion of the age pyramid that resulted in a higher percentage of young dependents. This suggests that the country is paying a high price for its high population growth resulting to low saving rate and consequently, low economic growth. The results also show that remittance from migrant workers is a major source of aggregate household saving.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 21245.

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Date of creation: Dec 2008
Date of revision:
Publication status: Published in The Philippine Statistician 1-4.57(2008): pp. 1-27
Handle: RePEc:pra:mprapa:21245
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  1. Andrew Coleman, . "Household Savings: A Survey of Recent Microeconomic Theory and Evidence," Treasury Working Paper Series 98/08, New Zealand Treasury.
  2. Charles Yuji Horioka & Junmin Wan, 2006. "The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data," NBER Working Papers 12723, National Bureau of Economic Research, Inc.
  3. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December.
  4. David E. Bloom & David Canning & Bryan Graham, 2002. "Longevity and Life Cycle Savings," NBER Working Papers 8808, National Bureau of Economic Research, Inc.
  5. Balisacan, Arsenio M. & Mapa, Dennis S. & Briones, Kristine Joy S., 2007. "Robust Determinants of Income Growth in the Philippines," Philippine Journal of Development PJD 2006 Vol. XXXIII Nos., Philippine Institute for Development Studies.
  6. Robert M. Schmidt & Allen C. Kelley, 1996. "Saving, dependency and development," Journal of Population Economics, Springer, vol. 9(4), pages 365-386.
  7. Modigliani, Franco, 1985. "Life Cycle, Individual Thrift and the Wealth of Nations," Nobel Prize in Economics documents 1985-1, Nobel Prize Committee.
  8. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "Economic Growth and the Demographic Transition," NBER Working Papers 8685, National Bureau of Economic Research, Inc.
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  10. repec:oup:qjecon:v:110:y:1995:i:3:p:641-80 is not listed on IDEAS
  11. Paxson, Christina, 1996. "Saving and growth: Evidence from micro data," European Economic Review, Elsevier, vol. 40(2), pages 255-288, February.
  12. Bloom, David E & Williamson, Jeffrey G, 1998. "Demographic Transitions and Economic Miracles in Emerging Asia," World Bank Economic Review, World Bank Group, vol. 12(3), pages 419-55, September.
  13. Ronald D Lee & Andrew Mason & Tim Miller, 1998. "Saving, Wealth, and Population," Working Papers 199805, University of Hawaii at Manoa, Department of Economics.
  14. repec:phd:pjdevt:pjd_2006_vol._xxxiii_nos._1and2-b is not listed on IDEAS
  15. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  16. Browning, Martin & Deaton, Angus & Irish, Margaret, 1985. "A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle," Econometrica, Econometric Society, vol. 53(3), pages 503-43, May.
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