Social Sciences in China (Chinese Edition)

No.8, 2013

The Effects of the Age Structure of Population and the Old-age Insurance System Transition on Residents’ Savings Rates

(Abstract)

Yang Jijun and Zhang Erzhen

The progressive rise of resident’s savings is closely associated with the age structure of population, the extension of average life expectancy and the old-age insurance system reform. This study applies dynamic panel regression models to Chinese provincial data over the 1994-2010 period, and finds that due to the “long-term tendency” of household expenditure structure and endogenous labor supply, the effect of child dependency burden on residents’ savings is positive; the growing proportion of the “non-productive” elderly population tends to restrain people from savings; and the coverage and payment level of old-age insurance have a significantly positive effect on residents’ savings, indicating that the old-age insurance reform has not alleviated residents’ concerns about their old-age life and thus has not reduced the savings. Therefore, weakening the birth control policy or improving the birth rate cannot reduce residents’ savings. Rather, measures such as delaying the retirement age, tapping the consumptive potential of working-age population and lowering the uncertainty through old-age insurance reform may be more effective in reducing residents’ high savings rates.