Demographic structure and private savings: some evidence from emerging markets

This paper tests the life cycle hypothesis that private saving rises with a higher percentage of working population and fall with higher percentages of the young and retired groups. Consistent with this hypothesis, our results from annual data for fourteen emerging markets suggest that age structure is a prime determinant of national saving. The results reveal a significant positive (negative) relationship between the national saving ratio and the percentage of working (children) population groups in the majority of the countries. The results are less conclusive regarding the statistical relationship between national saving and the elderly population group and several explanations for the apparent weak relationship are discussed.