Can Skill Biased Technological Progress Have a Role in the Decline of the Savings Rate?

Areendam Chanda

Macroeconomics from University Library of Munich, Germany

Abstract: This paper explores the consequences of skill biased technological progress on the savings rates. The literature, both theoretical and empirical, on the causes and consequences of skill biased technological progress in the past few years has burgeoned considerably. So has the literature on declining household savings, motivated by the American experience over the past couple of decades. I present a general equilibrium model where declining savings rates emerges as an outcome of exogenously driven skill biased technological progress. The link between the two is attributed to optimizing behavior of altruistic households. In an overlapping generations model, parents are assumed to derive utility from both spending on their children's education and making monetary transfers (or bequests). I show that increases in the growth rate of skill biased technological change causes a shift in allocations away from bequests in favor of education- leading to a decline in domestic capital accumulation. The analysis is extended to incorporate life cycle savings both under certainty and uncertainty regarding the timing of death.

Keywords: Technological Change; Savings; overlapping Generations; Human Capital; Growth (search for similar items in EconPapers)
JEL-codes: D91 E21 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2002-02-22
New Economics Papers: this item is included in nep-dge
Note: Type of Document - PDF; prepared on IBM PC - PC-TEX; to print on HP/PostScript/Franciscan monk; pages: 43; figures: included. We never published this piece and now we would like to reduce our mailing and xerox cost by posting it.
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0202/0202004.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0202004

Access Statistics for this paper

More papers in Macroeconomics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).