Saving and bequest in China: An analysis of intergenerational exchange

Ingvild Almås, Eleonora Freddi, Øystein Thøgersen

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Particularly high saving rates among the elderly in both rural and urban China call for an investigation of the involved bequest motive. Utilizing unique survey data from a diverse group of Chinese households, we document that the magnitude of the bequest from parent to child is associated with the level of personal assistance from child to parent. Moreover, we find indicative evidence that both bequest and assistance are increasing in the parent's income and decreasing in the child's income. Comparing with the predictions from a stylized intergenerational model, these findings are consistent with an exchange‐based bequest motive. Our findings have potential implications for how public policies and transfer schemes should be designed in order to contribute to the Chinese government objective of increased private consumption. Our results are conditional on the inclusion of housing wealth as part of the bequest, which indicates that transfer of housing is key to understanding the intergenerational assistance and bequest motives, and subsequently the high saving levels among the elderly in China.
Original languageEnglish
JournalEconomica
DOIs
Publication statusE-pub ahead of print - Jan 2019

Fingerprint

Bequests
China
Bequest motive
Income
Public transfers
Inclusion
Survey data
Prediction
Rural China
Housing wealth
Urban China
Public policy
Household
Saving rate
Government
Private consumption

Cite this

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title = "Saving and bequest in China: An analysis of intergenerational exchange",
abstract = "Particularly high saving rates among the elderly in both rural and urban China call for an investigation of the involved bequest motive. Utilizing unique survey data from a diverse group of Chinese households, we document that the magnitude of the bequest from parent to child is associated with the level of personal assistance from child to parent. Moreover, we find indicative evidence that both bequest and assistance are increasing in the parent's income and decreasing in the child's income. Comparing with the predictions from a stylized intergenerational model, these findings are consistent with an exchange‐based bequest motive. Our findings have potential implications for how public policies and transfer schemes should be designed in order to contribute to the Chinese government objective of increased private consumption. Our results are conditional on the inclusion of housing wealth as part of the bequest, which indicates that transfer of housing is key to understanding the intergenerational assistance and bequest motives, and subsequently the high saving levels among the elderly in China.",
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Saving and bequest in China : An analysis of intergenerational exchange. / Almås, Ingvild; Freddi, Eleonora; Thøgersen, Øystein.

In: Economica, 01.2019.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Saving and bequest in China

T2 - An analysis of intergenerational exchange

AU - Almås, Ingvild

AU - Freddi, Eleonora

AU - Thøgersen, Øystein

PY - 2019/1

Y1 - 2019/1

N2 - Particularly high saving rates among the elderly in both rural and urban China call for an investigation of the involved bequest motive. Utilizing unique survey data from a diverse group of Chinese households, we document that the magnitude of the bequest from parent to child is associated with the level of personal assistance from child to parent. Moreover, we find indicative evidence that both bequest and assistance are increasing in the parent's income and decreasing in the child's income. Comparing with the predictions from a stylized intergenerational model, these findings are consistent with an exchange‐based bequest motive. Our findings have potential implications for how public policies and transfer schemes should be designed in order to contribute to the Chinese government objective of increased private consumption. Our results are conditional on the inclusion of housing wealth as part of the bequest, which indicates that transfer of housing is key to understanding the intergenerational assistance and bequest motives, and subsequently the high saving levels among the elderly in China.

AB - Particularly high saving rates among the elderly in both rural and urban China call for an investigation of the involved bequest motive. Utilizing unique survey data from a diverse group of Chinese households, we document that the magnitude of the bequest from parent to child is associated with the level of personal assistance from child to parent. Moreover, we find indicative evidence that both bequest and assistance are increasing in the parent's income and decreasing in the child's income. Comparing with the predictions from a stylized intergenerational model, these findings are consistent with an exchange‐based bequest motive. Our findings have potential implications for how public policies and transfer schemes should be designed in order to contribute to the Chinese government objective of increased private consumption. Our results are conditional on the inclusion of housing wealth as part of the bequest, which indicates that transfer of housing is key to understanding the intergenerational assistance and bequest motives, and subsequently the high saving levels among the elderly in China.

U2 - 10.1111/ecca.12303

DO - 10.1111/ecca.12303

M3 - Article

JO - Economica

JF - Economica

SN - 0013-0427

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