Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319145 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17876
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Low- and middle-income countries are experiencing fast population aging and reductions in extreme poverty, increasing theoretical incentives to save for old age, but empirical evidence on household wealth accumulation over the life cycle is lacking. Using age-cohort-time decompositions on 18 years of micro-data from Pakistan, we show that the average household accumulates wealth equivalent to 5 years' worth of consumption between the ages of 25 and 65. Furthermore, this is mostly in the form of illiquid residential housing and land in rural areas. Examination of housing acquisitions, renovations, and dwelling characteristics over the life cycle reveals that wealth accumulation in 2001-2018 resulted partly from active investment in housing and partly from capital gains. To the extent that keeping all wealth in the form of housing may be sub-optimal, this constrained ability to save for the long term could motivate the extension of contributory pension instruments to informal sector workers, the majority of the workforce in this setting.
Subjects: 
social protection
savings
informality
aging
JEL: 
D14
D15
J11
J26
J46
J55
Document Type: 
Working Paper

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