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The Chinese Saving Rate: Long-Term Care Risks, Family Insurance, and Demographics

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  • Ayşe İmrohoroğlu

    (University of Southern California)

  • Kai Zhao

    (University of Connecticut)

Abstract

In this paper, we show that a general equilibrium model that properly captures the risks in old age, the role of family insurance, changes in demographics, and the productivity growth rate is capable of generating changes in the national saving rate in China that mimic the data well. Our findings suggest that the combination of the risks faced by the elderly and the deterioration of family insurance due to the one-child policy may account for approximately half of the increase in the saving rate between 1980 and 2010. Changes in the productivity growth rate account for the fluctuations in the saving rate during this period.

Suggested Citation

  • Ayşe İmrohoroğlu & Kai Zhao, 2017. "The Chinese Saving Rate: Long-Term Care Risks, Family Insurance, and Demographics," Working papers 2017-17, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2017-17
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    Cited by:

    1. Michael Sposi, 2017. "Demographics and the Evolution of Global Imbalances," Globalization Institute Working Papers 332, Federal Reserve Bank of Dallas.
    2. Yang, Xintong & Gan, Li, 2020. "Bequest motive, household portfolio choice, and wealth inequality in urban China," China Economic Review, Elsevier, vol. 60(C).
    3. Gerlagh, Reyer & Jaimes, Richard & Motavasseli, Ali, 2017. "Global demographic change and climate policies," Other publications TiSEM 7a4ee2a9-e025-4ec0-8bc8-f, Tilburg University, School of Economics and Management.
    4. Juan Carlos Conesa & Yan Wang, 2020. "The role of demographics and migration for the future of economic growth in China," Department of Economics Working Papers 20-08, Stony Brook University, Department of Economics.
    5. Facundo Piguillem & Guillermo Ordonez, 2015. "Retirement in the Shadow (Banking)," 2015 Meeting Papers 1200, Society for Economic Dynamics.
    6. Hyun Lee & Kai Zhao & Fei Zou, 2019. "Does the Early Retirement Policy Really Benefit Women?," Working papers 2019-12, University of Connecticut, Department of Economics.
    7. Ayşe İmrohoroğlu & Kai Zhao, 2020. "Household Saving, Financial Constraints, And The Current Account In China," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(1), pages 71-103, February.
    8. Shiyuan Pan & Kai Xu & Kai Zhao, 2020. "Deregulation as a Source of China’s Economic Growth," Working papers 2020-01, University of Connecticut, Department of Economics.
    9. Rajnish Mehra & John Donaldson & Christos Koulovatianos & Jian Li, 2018. "Demographics and FDI: Lessons from China’s One-Child Policy," NCAER Working Papers 112, National Council of Applied Economic Research.
    10. Aaron Cooke & Hyun Lee & Kai Zhao, 2017. "Houses Divided: A Model of Intergenerational Transfers, Differential Fertility and Wealth Inequality," Working papers 2017-22, University of Connecticut, Department of Economics.
    11. Michael Dotsey, 2019. "Demographic Aging, Industrial Policy, and Chinese Economic Growth," 2019 Meeting Papers 640, Society for Economic Dynamics.
    12. Michael Dotsey & Wenli Li & Fang Yang, 2019. "Demographic Aging, Industrial Policy, and Chinese Economic Growth," Working Papers 19-21, Federal Reserve Bank of Philadelphia.
    13. Yueqiang Zhao & Manying Bai & Peng Feng & Mengyuan Zhu, 2018. "Stochastic Assessments of Urban Employees’ Pension Plan of China," Sustainability, MDPI, Open Access Journal, vol. 10(4), pages 1-15, March.
    14. Ayşe İmrohoroğlu & Kai Zhao, 2020. "Rising Wealth Inequality: Intergenerational Links, Entrepreneurship, and the Decline in Interest Rate," Working papers 2020-13, University of Connecticut, Department of Economics.
    15. Yi Chen & Yingfei Huang, 2020. "The power of the government: China's Family Planning Leading Group and the fertility decline of the 1970s," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 42(35), pages 985-1038.
    16. He, Hui & Huang, Feng & Liu, Zheng & Zhu, Dongming, 2018. "Breaking the “iron rice bowl:” Evidence of precautionary savings from the chinese state-owned enterprises reform," Journal of Monetary Economics, Elsevier, vol. 94(C), pages 94-113.
    17. Lim, Kyoung Mook, 2020. "Public provision of health insurance and aggregate saving in an overlapping generations model with endogenous health risk: The South Korean case," Economic Modelling, Elsevier, vol. 91(C), pages 233-246.
    18. Manuel Garcia-Santana & Josep Pijoan-Mas & Lucciano Villacorta, 2018. "Investment and Saving along the Development Path," 2018 Meeting Papers 870, Society for Economic Dynamics.

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