Research In Precautionary Saving Behavior Of Zhejiang Countriside Under Changing Society

Since Reform and Opening-up, especially during the 80's, in Zhejiang rural economy, a phenomenon making people astonishing: Deposit increasing income and high saving rate, while consumption is dejected and apathetic. This phenomenon is common among Chinese rural area. Economists believe resident's motivation of precautionary saving is too strong and they believe precautionary saving is arouse from the uncertainty of income and spend. Most research also focus in this area, lacking research on the uncertainty comes from the changing social structure. However, Chinese country, which in the process of industrialization and urbanization, not only face the risk from agriculture , also the shocks come from social transition. This paper focus on Zhejiang rural saving behavior: contributes to industrialization and urbanization, Zhejiang countryside has been one of the richest in China. As ohers, despite of natural uncertainty, Zhejiang countryside has to face uncertainty come from composition of population, especially from composition of employed population and age structure of population. While research in this field is black. Majority scholars use model of precautionary saving is the expansion of Life-Cycle Hypothesis (RELCH). While it's suit for explaining behavior in stable society, especially in developed countries. However, Zhejiang countryside is in a changing process. Therefore, this paper combines ECM model with Zhejiang rural facts, then use the macroeconomic data of Zhejiang rural area, to analyze the precautionary saving.This text has three main conclusions: First, Zhejiang farmers 's spend-saving behavior have changed greatly around 1995; Second, the effect of income uncertainty mainly contributed to wage's changing; Thirdly, uncertainty and changes in composition of employed population and age structure of population decided the motivation of precautionary saving. The relationship between motivation of precautionary saving and the rate of the old is negative; the relationship between motivation of precautionary saving and the growth rate of workers is positive. All of this make precautionary saving increase.