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Micro-Data Evidence on Family Size and Chinese Saving Rates

Steven Lugauer (), Jinlan Ni () and Zhichao Yin ()
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Zhichao Yin: Southwestern University of Finance and Economics

No 23, Working Papers from University of Notre Dame, Department of Economics

Abstract: This paper examines the impact of family size on household saving. We first study a theoretical life-cycle model that includes finite lifetimes and saving for retirement and in which parents care about the consumption of their dependent children. The model implies a negative relationship between the number of dependent children in the family and the household’s saving rate. Then, we test the model’s implications using a new data set on household finances in China. We use the differential enforcement of the one-child policy across counties to address the endogeneity between household saving and fertility decisions within a standard two-stage least squares Tobit regression. We find that Chinese families with fewer dependent children have significantly higher saving rates. The regressions also indicate that saving rates vary with age and tend to be higher for households with more workers, higher education, better health, and more assets.

Keywords: China; Household Saving; Demographics; Overlapping Generations (search for similar items in EconPapers)
JEL-codes: D12 D91 E21 F63 J11 O12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-gro and nep-mac
Date: 2014-06, Revised 2014-06
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Downloads: (external link) First version, 2013 (application/pdf)

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