Research on the impact of China’s population age structure on endogenous resident saving
(2.College of Information, Liaoning University;)
(3.School of Economics, Liaoning University)
【Abstract】The paper studies the impact of Chinese age structure changes on resident savings by using the endogenous resident savings function, which is constructed on the extended continuous overlapping generations (COLG) model. The theoretical analysis shows that children’s dependency ratio and the elderly dependency ratio have a U-shaped relationship with the resident saving rate. The empirical analysis of China's provincial dynamic panel data model finds that children’s dependency ratio has a U-shaped dynamic relationship with the resident saving rate, which is consistent with the results of the theoretical model analysis and can be completely interpreted by parents expectations of income and expenditure. However, both the elderly dependency ratio and the total dependency ratio have an inverted U-shaped relationship with the resident saving rate, which is related to the fact that China's social security system reform still lags behind and has not performed well. Therefore, changing the resident savings preferences, reducing the family dependency burden and increasing the social security rate and its level are necessary to reduce the current rate of resident savings, expand domestic demand and promote the economic growth.
【Keywords】 population age structure; life-cycle model; overlapping generations model; dynamic panel data model;
【Funds】 Youth Project of National Social Science Foundation of China (13CRK027).;
. ① According to Yaari (1965), the individual utility is influenced by not only preferences but also the uncertain death risk. [^Back]
. ② Here, intertemporal substitution elasticity σ ≠ 1. If intertemporal substitution elasticity is 1 and assuming that the utility is U[c (v, t)] = ln[c (v, t)], the subsequent calculations will be simplified with the basic conclusion unchanged. [^Back]
. ① Due to the lack of authoritative data of the dependency expenses for the children by the parents and the maintenance expenses for the elderly people by the children, this paper estimates the data according to the law provisions. According to Article 37 of Marriage Law of the People's Republic of China, the living, education and health care of the children after their parents’ divorce should be paid with 20% ~ 30% of their dependency fees. This paper takes the average value of expenditure dependency ratios as 25%. [^Back]
. ② According to the regulations of "Marriage Law of People's Republic of China," the maintenance expenditure of the elderly who have two and less children is calculated based on 50% of the portion of per capital monthly income of their children subtracted by the minimum subsistence level. In 2013, the per capita disposable income of Chinese urban residents was CNY 26,955.1; the per capita net income of rural residents was CNY 8895.9; the urban population was accounted for 53.73% of the total population; and the rural population was accounted for 46.27% of the total population. Due to the different levels of economic development of various regions, it has not yet introduced a unified national minimum living standard. According to the accessible data, in 2013, the monthly average income of most of the urban residents was CNY 300, and the average annual income of the rural residents was CNY 2000. After being weighted and averaged according to the proportion of the urban population to the rural population, the annual maintenance expenditure of the elderly population is CNY 6902.5, and accounted for 37.1% of the annual average income. [^Back]
. ③ To study the debt neutral problem, Buiter (1988) used the uncertain lifecycle approach by Yaari-Blanchard for reference. The constant population scale is changed to have non-negative fertility and mortality. The total number of socio-population can rise or fall with changes in fertility and mortality. [^Back]
. ② The number of the lagged phases of the resident saving rate is determined based on the significance of the lagged variables in the dynamic regression model and AR (2) test. [^Back]
. ③ Since the life expectancy data are published only in the census and sample surveys, the life expectancy data in the existing literatures are generally calculated (Yang and Zhang, 2013) or carried out with proxy (Fan and Zhu, 2012) according to the death rate. According to the actual calculation, this paper finds that the life expectancy analysis method Yang Jijun and Zhang Erzhen (2013) has the upward bias when it is used for inferring the data in recent years. Therefore, this paper chooses the death rate as a proxy variable of the life expectancy. [^Back]
1. Dong, L. & Zhao, W. Journal of Financial Research (金融研究), (3) (2011).
2. Fan, C. & Zhu, B. Population Research (人口研究), (4) (2012).
3. Li, J. The Journal of Quantitative & Technical Economics (数量经济技术经济研究), (8) (2006).
4. Li, W. Population & Economics (人口与经济), (1) (2014).
5. Li, X. & Zhu, C. Journal of Xiamen University (Arts & Social Sciences) (厦门大学学报(哲学社会科学版)), (3) (2011).
6. Li, Y. & Yin, J. Economic Research Journal (经济研究), (2) (2005).
7. Li, Z. & Qi, L. Social Science in China (中国社会科学), (2) (2010).
8. Liu, Y. & Lu, M. China Economic Quarterly (经济学(季刊)), (4) (2008).
9. Qi, T. Economic Research Journal (经济研究), (9) (2000).
10. Wang, Y. & Wang, Y. Economic Survey (经济经纬), (3) (2014).
11. Wang, W. Journal of Finance and Economics (财经研究), (2) (2008).
12. Wang, W. Economic Research Journal (经济研究), (10) (2010).
13. Yang, J. Finance & Economics (财经科学), (7) (2009).
14. Yang, J. & Zhang, E. Social Science in China (中国社会科学), (8) (2013).
15. Yang, R. & Chen, B. Economic Research Journal (经济研究), (8) (2009).
16. Yuan, Z. & Song, Z. Economic Research Journal (经济研究), (11) (2000).
17. Blanchard O.J. (1985), Debts, Deficits, and Finite Horizons. Journal of Political Economy. Vol. 93(2): 223–247.
18. Buiter W.H. (1988), Death, Birth, Productivity Growth and Debt Neutrality. The Economic Journal. Vol. 98(391): 279–293.
19. Coale, A.J., Hoover, E.M. (1958), Population Growth and Economic Development in Low-Income Countries. Princeton: Princeton University Press, N.J.
20. Feldstein M. (1974), Social Security, Induced Retirement, and Aggregate Capital Accumulation. Journal of Political Economy. Vol. 82(5): 905–926.
21. H. d’Albis (2007), Demographic Structure and Capital Accumulation. Journal of Economic Theory. Vol. 132(1): 411–434.
22. Lau S.P. (2009), Demographic Structure and Capital Accumulation: A Quantitative Assessment. Journal of Economic Dynamics & Control. Vol. 33(3): 554–567.
23. Loayza N., Schmidt Hebbel K., Serven L. (2000), What Drives Private Saving Across the World? The Review of Economics and Statistics. Vol. 82(2): 165–181.
24. Manfredi P., Fanti L. (2006), The Complex Effects of Demographic Heterogeneity on the Interaction between the Economy and Population. Structure Change and Economic Dynamics. Vol. 17(2): 148–173.
25. Mierau, J.O., Turnovsky S.J. (2014), Capital Accumulation and the Source of Demographic Change. Journal of Population Economy. Vol. 27(3): 857–894.
26. Modigliani F., Brumberg R. (1954), Utility Analysis and the Consumption Function: An Interpretation of Cross Section Data. Modigliani F., The Collected Papers of Franco Modigliani, Volume 6, Cambridge: The MIT Press. Chapter 1: 3–45.
27. Samuelson P.A. (1958), An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money. The Journal of Political Economy. Vol. 66(6): 467–482.
28. Yaari M.E. (1965), Uncertain Lifetime, Life Insurance and the Theory of the Consumer. The Review of Economic Studies. Vol. 32(2): 137–150.
29. Zhang J., Zhang J. and Lee R. (2001), Mortality Decline and Long-run Economic Growth. Journal of Public Economics. Vol. 80(3): 485–507.