Rise and fall of the Japanese saving rate: The role of social security and intra-family transfers

Abstract

Alternative models of household saving behaviour are tested using Japanese post-war time series data. Basic life-cycle theory and models based on some form of intergenerational altruism are rejected in favour of an extended life-cycle model based on the assumption of strategic self-interest. The early rise and subsequent fall of the saving rate is explained by the interaction of state, capital market and extended family as providers of old-age social security.