Saving and Bequest in China: An Analysis of Intergenerational Exchange

33 Pages Posted: 8 May 2020

See all articles by Ingvild Almås

Ingvild Almås

Stockholm University - Institute for International Economic Studies (IIES)

Oystein Thogersen

Norwegian School of Economics (NHH) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 2020

Abstract

Particularly high saving rates among the elderly in both rural and urban China call for an investigation of the involved bequest motive. Utilizing unique survey data from a diverse group of Chinese households, we document that the magnitude of the bequest from parent to child is associated with the level of personal assistance from child to parent. Moreover, we find indicative evidence that both bequest and assistance are increasing in the parent's income and decreasing in the child's income. Comparing with the predictions from a stylized intergenerational model, these findings are consistent with an exchange‐based bequest motive. Our findings have potential implications for how public policies and transfer schemes should be designed in order to contribute to the Chinese government objective of increased private consumption. Our results are conditional on the inclusion of housing wealth as part of the bequest, which indicates that transfer of housing is key to understanding the intergenerational assistance and bequest motives, and subsequently the high saving levels among the elderly in China.

Suggested Citation

Almås, Ingvild and Thøgersen, Øystein, Saving and Bequest in China: An Analysis of Intergenerational Exchange (January 2020). Economica, Vol. 87, Issue 345, pp. 249-281, 2020, Available at SSRN: https://ssrn.com/abstract=3595585 or http://dx.doi.org/10.1111/ecca.12303

Ingvild Almås (Contact Author)

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden

Øystein Thøgersen

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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