Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/51714
Authors: 
Chamon, Marcos
Liu, Kai
Prasad, Eswar
Year of Publication: 
2010
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5331
Abstract: 
China's household saving rate has increased markedly since the mid-1990s and the agesaving 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.
Subjects: 
China
household savings
income uncertainty
pension reforms
buffer-stock savings
JEL: 
D91
J3
E21
Document Type: 
Working Paper

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