Working Paper: NBER ID: w4330
Authors: Angus S. Deaton; Christina H. Paxson
Abstract: This paper examines issues of household saving, growth. and aging in Taiwan. The Taiwanese patterns of high income growth, declines in fertility, and increases in life expectancy all have implications for life-cycle saving. We use data from fifteen consecutive household income and expenditure surveys. from 1976 to 1990, to examine whether observed profiles of consumption and saving are consistent with life-cycle theory. The patterns of consumption and saving across households of different ages and cohorts appear to be broadly consistent with a life-cycle model. However. the data also indicate that household consumption tracks income closely. and this evidence casts doubt on simple life-cycle theory.
Keywords: lifecycle saving; economic growth; demographic transition; Taiwan
JEL Codes: I3; D1; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high income growth (O49) | increased national saving rates (E21) |
| increased national saving rates (E21) | higher lifetime wealth among younger cohorts (G51) |
| age cohorts (J11) | savings decline with age (D14) |
| household consumption closely tracks income (D10) | challenges lifecycle theory (O41) |
| younger individuals having fewer adult children (J13) | incentivizes higher saving rates (D14) |
| savings and productivity growth (O49) | aligns with lifecycle predictions (C41) |