Savings Rate, Population Structure And Income Growth

Since the establishment of reform and opening up policy,China' s economy has experienced rapid growth,and mean while,there is also high rate of growth in savings of residents.One fact that can not be ignored is that with the enforcement of family planning policy,population structure of China has changed a lot.So,is there any relation between population structure and high rate of savings,and what is the specific relation between the two? This paper will explore that relation through empirical analysis.Based on Life Cycle Hypothesis theory,this paper attempts to give a more satisfied explanation to the change in saving rate from 1953 to 2000 in China,by applying Cointegration Theory of modern econometric theory and introducing the population structure variable into the VAR model.According to the result of empirical analysis,this paper finds that the change in population structure has great influence on the households' saving behavior,and provides that the saving rate is more affected by the population structure than by the growth rate of income. In other words,with the increase in the ratio between population of employment and underage population,the saving rate increased significantly.Besides,by applying structural break test,this paper finds that year 1978 in the enforcement of family planning policy is a breaking point,thus this paper puts forwards strong evidence for the changes in saving rate.