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Cited by 59Financial Literacy, Pension, Retirement AnalysisGender, Labor, and Family DynamicsEconomic theories and models

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

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Banerjee, Abhijit, Meng, Xin, Porzio, Tommaso, Qian, Nancy·2014·National Bureau of Economic Research
DOI 10.3386/w20050
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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.

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  • Empirical evidence tends to show that children and savings act as substitute instruments for old-age security.

    “Empirical evidence tends to show that children and savings act as substitute instruments for old-age security (e.g., Banerjee et al. 2014, Filoso & Papagni 2015, Cigno 2016, Lugauer et al. 2019).”

    From Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences (2024) · cites this paper as Banerjee et al. 2014

  • A body of literature finds consistent evidence of a strong negative effect of fertility on savings.

    “At the microeconomic level, a body of literature, much of it based on the quasi-experimental nature of the introduction and recent relaxation of China's one-child policy (Banerjee et al. 2014, Ge et al. 2018, Choukhmane et al. 2023), has emerged that finds consistent evidence of a strong negative effect of fertility on savings.”

    From Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences (2024) · cites this paper as Banerjee et al. 2014

  • The fertility decline in China explains about 50% of the increase in aggregate savings, a finding that must be corrected downward when taking into account general equilibrium feedbacks.

    “Curtis et al. (2015) employ structural modeling in partial equilibrium to show that the fertility decline in China explains about 50% of the increase in aggregate savings, a finding that must be corrected downward when taking into account general equilibrium feedbacks (Banerjee et al. 2014).”

    From Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences (2024) · cites this paper as Banerjee et al. 2014

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Research works printed but not linked: 5

  1. Chang, C., C. Lee, S. McKibben, D. Poston, and C. Walther (2005): Fertility, Family Planning and Population Policy in China, Routledge Studies in Asia's Transformations.
  2. Taylor & Francis.
  3. Jones, C. I. (1999): Growth: with or without scale eects?, American economic review, pp. 139144.
  4. Manuelli, R. E., and A. Seshadri (2009): Explaining International Fertility Dierences, The Quarterly Journal of Economics, 124(2), 771807.
  5. Yang, J. (1986): Ma Yinchu zhuan (Biography of Ma Yinchu). Beijing: Zhongguo qingnian chubanshe (China Youth Press).

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Authors
Banerjee, A., Meng, X., Porzio, T., & Qian, N.
Affiliations
  • National Bureau of Economic Research (US)
  • Australian National University (AU)
ORCID
Venue
National Bureau of Economic Research
Publisher
National Bureau of Economic Research
Published
2014-04
DOI
10.3386/w20050
OpenAlex
W1562997220
Cited by
57
References
46
Citations by year
2026: 1 · 2025: 4 · 2024: 5 · 2023: 2 · 2022: 7 · 2021: 4 · 2020: 4 · 2019: 6 · 2018: 6 · 2017: 5 · 2016: 3 · 2015: 6 · 2014: 4
Type
report
Language
en
Open access
Locations
National Bureau of Economic Research (publishedVersion)
Funders
Australian Research Council (LP0669728)
Topics
  • Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
  • Social Sciences › Gender Studies › Gender, Labor, and Family Dynamics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
Keywords
household savings, overlapping generations model, general equilibrium effects, old-age support, intergenerational transfers

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