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National savings rate and sectoral income distribution: An empirical look at China

Xiao Chang, Tongliang An, Pui Sun Tam and Xinhua Gu

China Economic Review, 2020, vol. 61, issue C

Abstract: China's saving rate is found to be higher than predictions of empirical estimations based on conventional models of consumption. This problem has been recently admitted as arising from research attention biased towards household saving, yet savings by the corporate and public sectors (termed the non-household sector) may be more important in China. We find strong evidence that the biased distribution of national income towards the non-household sector is a key determinant of high aggregate saving in China, with this situation reinforced by its huge surplus labor. Such a sectoral perspective, albeit useful for elucidating Chinese savings, was previously used in descriptive discussions. This perspective is formally taken into account in our empirical study generating significant findings. We also show that high Chinese savings have more or less to do with other economic, demographic, and institutional factors as identified in the literature.

Keywords: China; Sectoral income distribution; Sectoral saving propensity; Sectoral and national saving rates (search for similar items in EconPapers)
JEL-codes: C33 D31 D91 E21 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.chieco.2019.01.002

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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