Understanding Why High Income Households Save More Than Low Income Households

Understanding Why High Income Households Save More Than Low Income Households
Author: Mark Huggett
Publisher:
Total Pages: 0
Release: 2001
Genre:
ISBN:

We use a calibrated life-cycle model to evaluate why high income households save as a group a much higher fraction of income than do low income households in US cross-section data. We find that (1) age and relatively permanent earnings differences across households together with the structure of the US social security system are sufficient to replicate this fact, (2) without social security the model economies still produce large differences in saving rates across income groups and (3) purely temporary earnings shocks of the magnitude estimated in US data alter only slightly the saving rates of high and low income households. Keyword(s): Saving; Distribution; Life cycle.

International Comparisons of Household Saving

International Comparisons of Household Saving
Author: James M. Poterba
Publisher: University of Chicago Press
Total Pages: 290
Release: 2007-12-01
Genre: Business & Economics
ISBN: 0226676285

Governments and corporations may chip in, but around the world houshold saving is the biggest factor in national saving. To better understand why saving rates differ across countries, this volume provides the most up-to-date analyses of patterns of household saving behavior in Canada, Italy, Japan, Germany, the United Kingdom, and the United States. Each of the six chapters examines micro data sets of household saving within a particular country and summarizes statistics on patterns of saving by age, income, and other demographic factors. The authors provide age-earning profiles and analyses of the accumulation of wealth over the lifetime in a clear way that allows quick comparisons between earning, consumption, and saving in the six countries. Designed as a companion to Public Policies and Household Saving (1994), which addresses saving policies in the G-7 nations, this volume offers detailed descriptions of saving behavior in all G-7 nations except France.

The Financial Diaries

The Financial Diaries
Author: Jonathan Morduch
Publisher: Princeton University Press
Total Pages: 248
Release: 2017-04-04
Genre: Business & Economics
ISBN: 0691172986

Drawing on the groundbreaking U.S. Financial Diaries project (http://www.usfinancialdiaries.org/), which follows the lives of 235 low- and middle-income families as they navigate through a year, the authors challenge popular assumptions about how Americans earn, spend, borrow, and save-- and they identify the true causes of distress and inequality for many working Americans.

Causes and Consequences of Income Inequality

Causes and Consequences of Income Inequality
Author: Ms.Era Dabla-Norris
Publisher: International Monetary Fund
Total Pages: 39
Release: 2015-06-15
Genre: Business & Economics
ISBN: 1513547437

This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.

Communities in Action

Communities in Action
Author: National Academies of Sciences, Engineering, and Medicine
Publisher: National Academies Press
Total Pages: 583
Release: 2017-04-27
Genre: Medical
ISBN: 0309452961

In the United States, some populations suffer from far greater disparities in health than others. Those disparities are caused not only by fundamental differences in health status across segments of the population, but also because of inequities in factors that impact health status, so-called determinants of health. Only part of an individual's health status depends on his or her behavior and choice; community-wide problems like poverty, unemployment, poor education, inadequate housing, poor public transportation, interpersonal violence, and decaying neighborhoods also contribute to health inequities, as well as the historic and ongoing interplay of structures, policies, and norms that shape lives. When these factors are not optimal in a community, it does not mean they are intractable: such inequities can be mitigated by social policies that can shape health in powerful ways. Communities in Action: Pathways to Health Equity seeks to delineate the causes of and the solutions to health inequities in the United States. This report focuses on what communities can do to promote health equity, what actions are needed by the many and varied stakeholders that are part of communities or support them, as well as the root causes and structural barriers that need to be overcome.

Aging and the Macroeconomy

Aging and the Macroeconomy
Author: National Research Council
Publisher: National Academies Press
Total Pages: 230
Release: 2013-01-10
Genre: Social Science
ISBN: 0309261961

The United States is in the midst of a major demographic shift. In the coming decades, people aged 65 and over will make up an increasingly large percentage of the population: The ratio of people aged 65+ to people aged 20-64 will rise by 80%. This shift is happening for two reasons: people are living longer, and many couples are choosing to have fewer children and to have those children somewhat later in life. The resulting demographic shift will present the nation with economic challenges, both to absorb the costs and to leverage the benefits of an aging population. Aging and the Macroeconomy: Long-Term Implications of an Older Population presents the fundamental factors driving the aging of the U.S. population, as well as its societal implications and likely long-term macroeconomic effects in a global context. The report finds that, while population aging does not pose an insurmountable challenge to the nation, it is imperative that sensible policies are implemented soon to allow companies and households to respond. It offers four practical approaches for preparing resources to support the future consumption of households and for adapting to the new economic landscape.

Do the Rich Save More?

Do the Rich Save More?
Author: Karen E. Dynan
Publisher:
Total Pages: 0
Release: 2011
Genre:
ISBN:

The question of whether higher-lifetime income households save a larger fraction of their income was the subject of much debate in the 1950s and 1960s, and while the answer was not resolved, it remains central to the evaluation of tax and macroeconomic policies. We resolve this long-standing question using new empirical methods applied to the Panel Study on Income Dynamics, the Survey of Consumer Finances, and the Consumer Expenditure Survey. We find a strong positive relationship between saving rates and lifetime income and a weaker but still positive relationship between the marginal propensity to save and lifetime income. There is little support for theories that seek to explain these positive correlations by relying solely on time preference rates, nonhomothetic preferences, or variations in Social Security benefits. There is more support for models emphasizing uncertainty with respect to income and health expenses, bequest motives, and asset-based means testing or behavioral factors causing minimal saving rates among low-income households.

Inequality, Leverage and Crises

Inequality, Leverage and Crises
Author: Mr.Michael Kumhof
Publisher: International Monetary Fund
Total Pages: 39
Release: 2010-11-01
Genre: Business & Economics
ISBN: 1455210757

The paper studies how high leverage and crises can arise as a result of changes in the income distribution. Empirically, the periods 1920-1929 and 1983-2008 both exhibited a large increase in the income share of the rich, a large increase in leverage for the remainder, and an eventual financial and real crisis. The paper presents a theoretical model where these features arise endogenously as a result of a shift in bargaining powers over incomes. A financial crisis can reduce leverage if it is very large and not accompanied by a real contraction. But restoration of the lower income group's bargaining power is more effective.