Do the Rich Save More in Japan? Evidence Based on Two Micro Data Sets for the 2000s
Using two household surveys for Japan, the Family and Lifestyle Survey (FLS) and the Family Income and Expenditure Survey (FIES) this paper investigates whether the saving rates of richer households (households with higher lifetime wealth) are higher than those of poorer households. The major difficulty in addressing this issue empirically is that a reliable proxy for lifetime wealth is rarely available. We therefore construct a number of proxies from the two surveys. While the estimated relationships are sensitive to the choice of proxy for lifetime wealth, the patterns observed for working age households in Japan are generally consistent with those reported for Western countries: we find significant positive correlations between saving rates and lifetime wealth when we use education and/or the type of occupation (job) as proxies, while the positive correlations disappear when we use consumption as an alternative proxy. We also try alternative proxies original to this study: lagged consumption, household assets, and/or purchase prices and find that the results with these instruments indicate marginally positive correlations between saving rates and lifetime wealth for working age households. We further find that the relationship between saving rates and lifetime wealth differs depending on the life stage of individual households. Older households with higher lifetime wealth appear to be dissaving to some extent, which is more or less consistent with the lifecycle model of consumption.