Demographic Determinants of Savings: Estimating and Interpreting the Aggregate Association in Asia

38 Pages Posted: 2 Feb 2005

See all articles by T. Paul Schultz

T. Paul Schultz

Yale University - Economic Growth Center; IZA Institute of Labor Economics

Date Written: January 2005

Abstract

Life cycle savings is proposed as one explanation for much of the increase in savings and economic growth in Asia. The association between the age composition of a nation's population and its savings rate, observed within 16 Asian countries from 1952 to 1992, is reestimated here to be less than a quarter the size reported in a seminal study, which assumed lagged savings is exogenous. Specification tests as well as common sense imply, moreover, that lagged savings is likely to be endogenous, and when estimated accordingly there remains no significant dependence of savings on the age composition, measured in several ways. Research should consider lifetime savings as a substitute for children, and model the causes for the decline in fertility which changes the age compositions and could thereby account for savings and growth in Asia.

Keywords: Life cycle savings, aging, Asian growth, demographic transition

JEL Classification: D91, J11, O11, O53

Suggested Citation

Schultz, T. Paul, Demographic Determinants of Savings: Estimating and Interpreting the Aggregate Association in Asia (January 2005). Available at SSRN: https://ssrn.com/abstract=639187

T. Paul Schultz (Contact Author)

Yale University - Economic Growth Center ( email )

Box 208269
New Haven, CT 06520-8269
United States
203-432-3620 (Phone)
203-432-5591 (Fax)

IZA Institute of Labor Economics

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

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