A Model of Competitive Saving Over the Life-cycle, and its Implications for the Saving Rate Puzzle in China

Guangyu Nie

2014 Papers from Job Market Papers

Abstract: This paper develops a life-cycle model with multi-dimensional matching in a frictionless marriage market where a single man's rank is determined by his age and wealth relative to others'. Using stable matching patterns, we analyze how people's marital age and saving behavior jointly respond to marriage market shocks. In particular, with wealth as a status good for mating competition, an otherwise standard age profile of savings exhibits an unusual pattern with younger households having relatively high saving rates compared to the middle-aged. This result is consistent with recent empirical findings from China. In addition, both the age gap between spouses and the aggregate saving rate rise when the sex ratio increases. Neglecting the response in marital ages will lead to an overstatement of the effect of the sex ratio imbalance on the increase of the aggregate saving rate.

JEL-codes: D10 E21 J11 J12 (search for similar items in EconPapers)
Date: 2014-11-29
New Economics Papers: this item is included in nep-dge, nep-mac and nep-tra
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