Journal
JOURNAL OF DEVELOPMENT ECONOMICS
Volume 105, Issue -, Pages 164-177Publisher
ELSEVIER
DOI: 10.1016/j.jdeveco.2013.07.014
Keywords
China; Household savings; Income uncertainty; Pension reforms; Buffer-stock savings
Categories
Ask authors/readers for more resources
China's urban household saving rate has increased markedly since the mid-1990s and the age-savings profile has become U-shaped. To understand these patterns, we analyze a panel of urban Chinese households over the period 1989-2009. We document a sharp increase in income uncertainty, largely due to an increase in the variance in household income attributed to transitory idiosyncratic shocks. We then calibrate a buffer-stock savings model to obtain quantitative estimates of the impact of rising household-specific income uncertainty as well as another shock to household income the pension reforms that were instituted in the late 1990s. Our calibrations suggest that rising income uncertainty and pension reforms lead younger and older households, respectively, to raise their saving rates significantly. These two factors account for two-thirds of the increase in China's urban household saving rate and the U-shaped age-savings profile. (C) 2013 International Monetary Fund. Published by Elsevier BV. All Rights Reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available