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

22 Pages Posted: 26 May 2012  

Ansgar Hubertus Belke

University of Duisburg-Essen - Department of Economics and Business Administration; IZA Institute of Labor Economics; Centre for European Policy Studies

Christian Dreger

German Institute for Economic Research (DIW Berlin); European University Viadrina Frankfurt (Oder); IZA Institute of Labor Economics; Chinese Academy of Social Sciences (CASS)

Richard R. Ochmann

German Institute for Economic Research (DIW Berlin)

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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.

Keywords: demographic change, wealth, savings

JEL Classification: G10, G11

Suggested Citation

Belke, Ansgar Hubertus and Dreger, Christian and Ochmann, Richard R., Do Wealthier Households Save More? The Impact of the Demographic Factor. IZA Discussion Paper No. 6567. Available at SSRN: https://ssrn.com/abstract=2066990

Ansgar Hubertus Belke (Contact Author)

University of Duisburg-Essen - Department of Economics and Business Administration ( email )

Universitätsstr. 9
Essen, 45141
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for European Policy Studies ( email )

1 Place du Congres, 1000
Brussels, 1000
Belgium

Christian Dreger

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

European University Viadrina Frankfurt (Oder) ( email )

Frankfurt (Oder)
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Chinese Academy of Social Sciences (CASS) ( email )

Beijing, 100732
China

Richard R. Ochmann

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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