The relationship ageing of the population and saving in an unemployment context: Empirical evidence using an autoregressive distributed lag bounds testing approach

Olfa Frini

Australian Economic Papers, 2021, vol. 60, issue 1, 98-121

Abstract: In this article, we emphasised that ageing population does not systematically depress savings by drawing attention to the factors that may distort that prediction of the life‐cycle hypothesis (LCH). To demonstrate it, we used two indicators for ageing: the total and aged dependency ratios and we looked at the economic context influence on national saving evolution through considering the labour market imbalance interference. By applying the autoregressive distributed lag approach, with Tunisian data during 1970–2018, a dynamic long‐run relationship between ageing and national saving is found, although it seemed to be sensitive to the used ageing indicator and the economic context. Indeed, the LCH is proved only by the total dependence ratio whereas the aged dependence ratio puts a significant long‐run upward pressure on saving. Further, in a context of unemployment without any benefit scheme, the LCH prediction cannot be endorsed by the two indicators. Hence, the social and economic conditions limit the LCH scope, bearing out that elderly not depress systematically savings. Therefore, to sustain saving major economic and financial reforms are needed, as to postpone the retirement age, to move from pay‐as‐you‐go system towards funded pension system, to promote life insurance and to diversify the long‐run savings products.

Date: 2021
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https://doi.org/10.1111/1467-8454.12195

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Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:60:y:2021:i:1:p:98-121

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