Work

Aggregate Fertility and Household Savings: A General Equilibrium Analysis using Micro Data

Year: 2014

Type: report

Abstract: This study uses micro data and an overlapping generations (OLG) model to show that general equilibrium (GE) forces are critical for understanding the relationship between aggregate fertility and household savings.First, we document that parents perceive children as an important source of old-age support and that, in partial equilibrium (PE), increased fertility lowers household savings.Then, we construct an OLG model that parametrically matches the PE empirical evidence.Finally, we extend the model to conduct a GE analysis and show that under standard assumptions and with the parameters implied by the data, GE forces can substantially offset the PE effects.Thus, focusing only on the PE can substantially overstate the effect of aggregate fertility on household savings.

Source: National Bureau of Economic Research

DOI: 10.3386/w20050

Authors: Abhijit Banerjee, Xin Meng, Tommaso Porzio, Nancy Qian

Institutions: National Bureau of Economic Research, Massachusetts Institute of Technology, Australian National University, Yale University

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

Funder: Australian Research Council

Award: Rural-Urban Migration in China and Indonesia: Patterns, Consequences and Policy Intervention

OpenAlex ID: W1562997220

Cites: 46

Cited by: 57

Related to: 10