Do the Rich Save More in Canada?

Sule Alan (), Kadir Atalay and Thomas F. Crossley

Quantitative Studies in Economics and Population Research Reports from McMaster University

Abstract: This paper is an attempt to answer the long standing question of whether households with higher lifetime income save a larger fraction of their income. The major difficulty in empirically assessing the relationship between lifetime incomes and saving rates is to construct a credible proxy for lifetime income. The Canadian Family Expenditure Survey (FAMEX) provides us with both unusually good data on savings rates and potential instruments with which we can construct reliable lifetime income proxies. Our empirical analysis suggests that the estimated relationship between saving rates and lifetime incomes is sensitive to the instrument used to proxy lifetime income. Nevertheless, our preferred estimates indicate that, except for poorest households (who simply do not save), saving rates do not differ substantially across lifetime income groups.

Keywords: saving rates; lifetime income; permanent income (search for similar items in EconPapers)
JEL-codes: C81 D12 (search for similar items in EconPapers)
Date: 2006-06
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http://socserv.mcmaster.ca/qsep/p/qsep406.pdf (application/pdf)

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Working Paper: Do the Rich Save More in Canada? (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:mcm:qseprr:406

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