Dennis S. Mapa and Kristine Joy S. Briones
Associate Professor and Director for Research School of Statistics, University of the Philippines Diliman, School of Economics, University of the Philippines Diliman
https://doi.org/10.57043/transnastphl.2009.4247
Abstract
The changing age structure of countries has substantial implications for savings and economic growth. In the course of the demographic transition, countries experience an increasing share of the working-age population relative to the total population, creating favorable effects on economic growth. Studies have shown that individuals accumulate savings during their working years to serve as a buffer for retirement. While the accumulation of capital can be used to address the life cycle deficit, it also influences growth. This paper examines the implications of the country’s population dynamics on the savings of the elderly using econometric models applied to household data from the Family Income and Expenditure Survey. The results show that the saving rate of the elderly is substantially higher compared to other age groups but has been on the decline since 1997. The accumulation of savings by the elderly is beneficial for economic growth. However, looking at the overall picture, the country’s rapid population growth results in a high percentage of young dependents, which negatively affects aggregate household savings. While the elderly have a higher saving rate, their contribution is not substantial enough to increase the aggregate saving rate.