Population Growth and Savings Rates

The Simple Relationship

The Simple Relationship When data on population growth G(P), was plotted against data on the average propensity to save (APS), the scatter indicated that there wasd no relationship. This tended to disprove the assumption of a negative relationship made by Coale and Hoover.

The Simple Relationship
When data on population growth G(P), was plotted against data on the average propensity to save (APS), the scatter indicated that there wasd no relationship. This tended to disprove the assumption of a negative relationship made by Coale and Hoover.

Effect of Income Growth

The Effect of Income The life cycle hypothesis implies that savings rates will rise as the economt grows because there will be a lag of several years between the time the income is earned and the time the income is spent since people are saving for their old age. Kelley found that a 1% increase in the growth rate of GDP G(Y) resulted in a .33 increase in the average propensity to save.

The Effect of Income
The life cycle hypothesis implies that savings rates will rise as the economt grows because there will be a lag of several years between the time the income is earned and the time the income is spent since people are saving for their old age. Kelley found that a 1% increase in the growth rate of GDP G(Y) resulted in a .33 increase in the average propensity to save.

Youth Dependency Rate

Interaction with Youth Dependency Rate The youth dependency rare (D1) is the ratio of the population under 15 years of age to the population aged 15 to 64. The more rapid the growth rate of GDP, the more significant is the youth dependency rate (D1) because the burden of children prevents young people who have higher incomes from using those incomes to increase savings. By reducing their birth rates, the nations of East Asia reduced their youth dependency rates (D1). This contributed to their high rates of saving and investment.

Interaction with Youth Dependency Rate
The youth dependency rare (D1) is the ratio of the population under 15 years of age to the population aged 15 to 64. The more rapid the growth rate of GDP, the more significant is the youth dependency rate (D1) because the burden of children prevents young people who have higher incomes from using those incomes to increase savings. By reducing their birth rates, the nations of East Asia reduced their youth dependency rates (D1). This contributed to their high rates of saving and investment.