Gone with the Wind: Demographic Transitions and Domestic Saving

Abstract

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Saving for Development: How Latin America and the Caribbean Can Save More and Better

“…Notes 1 See Commission on Growth and Development (2008). 2 See Cavallo, Sánchez, and valenzuela (2016). 3 See World Bank (2014b).…”

“…The synchronicity of the demographic transition in Asia and Latin America contrasts sharply with the divergence in their saving patterns. Based on this observation, Cavallo, Sánchez, and valenzuela (2016) study the contribution of demographic factors to saving rates. Interestingly, demographic factors have had a significant impact on saving rates in Asia, but only a small impact in Latin America and the Caribbean.…”

“…Whatever factors prevented saving rates from rising in Latin America and the Caribbean despite the favorable demographics-a topic 95 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Source: Authors' calculations based on Cavallo, Sánchez, and valenzuela (2016) and United Nations (2013). Note: This figure shows the total dependency ratio (the ratio of the population aged 0-14 and older than 65 to the population aged 15-64) across four regions: Europe, Asia, Latin America and the Caribbean, and Africa.…”

“…First, Grigoli, Herman, and Schmidt-Hebbel (2015) focus on private saving, while Cavallo, Sánchez, and valenzuela (2016) focus on private plus public saving. Second, Grigoli, Herman, and Schmidt-Hebbel (2015) focus on "old age dependency," while Cavallo, Sánchez, and valenzuela (2016) include young dependency and life expectancy as additional demographic variables, and thus their results relate to the three demographic factors. 12 Many studies document that household saving rates rise with income.…”

“…However, saving rates do not always respond to movements in demographics. Asia is the only major region in the world to substantially increase savings during the demographic dividend (Cavallo, Sánchez, and valenzuela, 2016). The decline in the dependency ratio can explain 22 percent of the saving increases between 1963 and 2012 in Asia, but only 3 percent in Latin America and the Caribbean during the same period.…”