“Population policies, demographic structural changes, and the Chinese household saving puzzle”

“Population policies, demographic structural changes, and the Chinese household saving puzzle”

Suqin Ge, Dennis Tao Yang, Junsen Zhang

In: European Economic Review, Vol. 101, January 2018, Pages 181 – 209

Household saving rates have increased dramatically over the past two decades in China, in addition to the rise in average saving rate; the age-saving profile has also evolved into an unusual pattern. In this paper, Ge et al. propose and test a new hypothesis that demographic structural changes caused by a series of population control policies since the 1970s have contributed to changes in China’s household saving patterns. Therefor they develop a simple overlapping generation (OLG) model to illustrate the effects of population control policies and demographic structural changes on saving decisions of individuals at different life stages.