RIEB Discussion Paper Series No.2026-02

Title

The Impact of Population Aging on the Household Saving Rate: The Case of Japan

Abstract

This paper analyzes the impact of the age structure of the population on the household saving rate using time-series data for Japan for the 1955-2019 period. It finds that there is a cointegrating relationship between Japan's household saving rate and her dependency ratio (the ratio of the dependent population to the working-age population) and that the latter has a negative and statistically significant impact on the former. This implies that the life-cycle model applies in the case of Japan, that trends over time in the age structure of Japans's population can largely explain trends over time in Japan's household saving rate, that the downward trend in Japans household saving rate since the mid-1970s can largely be explained by the aging of her population, and that further population aging will lead to further declines in Japan's household saving rate, most likely into negative territory, in future years.

Keywords

Age structure of the population; Cointegration; Cointegrating vector; Household saving; Japan; Life-cycle hypothesis; Life-cycle model; Population aging; Saving rate; Unit roots

JEL Classification

D12, D14, D15, E21, J11

Inquiries

Charles Yuji HORIOKA
Research Institute for Economics and Business Administration and Center for Computational Social Science,
Kobe University, JAPAN
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059
Institute of Social and Economic Research, Osaka University, JAPAN
Asian Growth Research Institute, JAPAN
National Bureau of Economic Research, U.S.A.