Lan Lan: Understanding the Saving Behavior of Chinese Households: Intergenerational Transfers and Housing
Job talk. Lan Lan is a PhD Candidate at the Toulouse School of Economics. She will present a paper entitled "Understanding the Saving Behavior of Chinese Households: Intergenerational Transfers and Housing".
This paper investigates the role of intergenerational transfers in explaining the age-saving profile of Chinese households. In a quantitative overlapping generations (OLG) model, saving rates are linked with the altruism of parents and the credit constraints of their children through intergenerational transfers. The saving rates of middle-aged parents decline with altruism (the “altruism channel”) and the tightness of their children’s credit constraints on housing purchase (“credit constraint channel”). The estimations of life-cycle saving rates based on this model line up well with the data. Using a sample of matched parent-child pairs from the China Family Panel Studies, we test the altruism channel by exploiting the exogenous deaths of children as a natural experiment. Next, we test the credit constraint channel using two mechanisms: the random allocation of military graduates to different cities; and the cross-city variation of mortgage accessibility. Parents whose children are sent by the military to cities with higher housing prices have lower saving rates, ceteris paribus. Access to discounts of down-payments for home buyers leads to an increase in their parents’ saving rates.
Host: Kjetil Storesletten