Income Uncertainty and Household Savings in China

By M. Chamon, Kai Liu, Eswar S. Prasad. Social Science Research Network, 2010

304 citations recorded by the source corpus.

China's household saving rate has increased markedly since the mid-1990s and the age-saving profile has become U-shaped. Using a panel of urban Chinese households covering 1989-2006, we document a sharp increase in income uncertainty. While the permanent variance of household income was stable, the transitory variance rose sharply. Based on these estimates, we calibrate a buffer-stock savings model and show that rising income uncertainty and pension reforms lead younger and older households, respectively, to raise their saving rates. These two factors account for over half of the increase in China's urban household savings rate and the U-shaped age-profile of savings.

View Paper: https://www.semanticscholar.org/paper/da219c151de225c78af16f02bd7b3adad1417e20

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

1. Pierre Bachas
2. Jin Feng
3. Eswar S. Prasad
4. S. Higgins
5. Enrique Seira
6. Lixin He
7. H. Sato
8. Paul J. Gertler

Citations in the corpus

• Rebalancing Growth in Asia (2009, background): “These authors also conclude that increases in housing prices and increases in downpayment requirements can explain the increase in saving rates among households with relatively young household heads, a result that echoes the one reported by Chamon and Prasad (2010) for China.”
• Demographic Patterns and Household Saving in China (2015, unknown): “Chamon et al. (2010) and Choi et al. (2013) document the high levels of uncertainty around urban household income in China.”
• Public pension and household saving: Evidence from urban China (2011, background): “Using household level data for 1989–2006, Chamon et al. (2010) found that rising income uncertainty can explain the rising savings rates among younger households.”
• The chinese saving rate: Long-term care risks, family insurance, and demographics (2018, unknown): “The father and the sons pool their resources and maximize a joint objective function.(9) Working age individuals are endowed with one unit of labor that they supply exogenously.”
• Banking on Trust: How Debit Cards Enable the Poor to Save More (2017, background): “These results are important for public policy, as building savings in formal nancial institutions has been shown to have positive welfare e ects for the poor by enabling them to decrease consumption volatility (Chamon et al., 2013; Prina, 2015), accumulate money for microenterprise investments (Dupa”