A Survey of Household Saving Behavior in Japan

This paper presents data on Japan's household saving rate, considers the reasons for Japan's high household saving rate in the past and the reasons for the recent decline therein, projects future trends in Japan's household saving rate, and consider the implications of my findings. It finds that Japan's high household saving rate was a temporary phenomenon and that it was high in both absolute and relative terms during the 1955-95 period (especially during the 1960s and 1970s) but that it was not unusually high during the prewar and early postwar periods or after 1995; second, that Japan's temporarily high household saving rate was due not to culture but to temporary economic, demographic, and institutional factors; third, that the decline in Japan's household saving rate since the mid-1970s is due to the weakening of these factors and that Japan's household saving rate can be expected to decline even further as these factors become even less applicable and that the rapid aging of Japan's population has played the most important role; and fourth, that there is nothing to worry about even if Japan's household saving rate falls to zero or even negative levels.

The Stagnation of Household Consumption in Japan

In this paper, I consider the extent to which the stagnation of household consumption is responsible for the decade-long recession in Japan during the 1990s and early 2000s and the reasons for the stagnation of household consumption during this period and find that the stagnation of private investment (and inventory investment) rather than that of household consumption was the major cause of the decade-long recession, that household consumption was nonetheless relatively stagnant during this decade, and that the stagnation of household consumption was due primarily to the stagnation of household disposable income, the decline in household wealth (which in turn was due primarily to the collapse of land and equity prices), and to a lesser extent, increased uncertainty about the future (especially about old age in general and public old-age pensions in particular), the deterioration of future prospects, and deflationary expectations concerning consumer prices.

Do Bequests Increase or Decrease Wealth Inequalities?

This paper finds that individuals in Japan do not leave very significant bequests, that parents often require a quid pro quo for bequests to their children, and that wealthier individuals leave less bequests, meaning that bequests ameliorate wealth inequalities.

The Dissaving of the Aged Revisited: The Case of Japan

In this paper, I survey the previous literature on the saving behavior of the aged in Japan and then present some survey data on the saving behavior of the aged in Japan that became available recently. To summarize the main findings of this paper, all previous studies as well as the newly available data I analyze find that the retired aged dissave and that even the working aged dissave at very advanced ages. These findings are consistent with the life cycle model and suggest that this model is highly applicable in the case of Japan.

Are the Japanese Unique? An Analysis of Consumption and Saving Behavior in Japan

In this paper, I conduct an analysis of consumption and saving behavior in Japan, looking both at trends over time and comparisons with the other industrialized countries. I find that some of the conventional wisdoms (that the Japanese are asset-rich and hold conservative portfolios) still hold but that others (that the Japanese are high savers and shun borrowing) no longer hold and that the Japanese are not unique, with the United States and the other Anglo-Saxon countries being the true exceptions in many respects.

A Comment on Nishimura, Nakajima, and Kiyota's "Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s"

Nishimura et al. (2005) analyze the entry/exit behavior of Japanese firms during the 1990s and find that relatively efficient firms exited while relatively inefficient firms survived during the banking-crisis period of 1996-97. They conclude that the natural selection mechanism (NSM) apparently malfunctions during severe recessions, but we offer a more plausible interpretation: NSM continued to function effectively even during this period, but aberrant banking practices caused a shift in the type of natural selection from directional to disruptive selection, with the most efficient as well as the least efficient firms being favored and firms of intermediate efficiency being selected against.

Is the Eldest Son Different? The Residential Choice of Siblings in Japan

In this paper, we analyze the determinants of the living arrangements of elderly parents and their children (whether elderly parents live with their children, and if so, with which child) in Japan using micro data from a household survey. We find that the proportion of elderly parents living with their eldest sons is much higher than that of elderly parents living with children other than the eldest son, even if the eldest son is not the eldest child. Moreover, we find that elderly parents are more likely to live with their eldest sons if the father was a self-employed worker before retirement, whereas they are more likely to live with a child other than the eldest son if the father was an executive before retirement. In addition, daughters whose husbands adopt the daughter's surname are more likely to live with the daughter's parents. All of these findings are consistent with the dynasty and/or strategic bequest (selfish life cycle) models. We also find that the living arrangements of elderly parents are still very much based on Japanese social norms and traditions. Thus, we find support for all models of household behavior other than the altruism model.

The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data

In this paper, we conduct a dynamic panel analysis of the determinants of the household saving rate in China using a life cycle model and panel data on Chinese provinces for the 1995-2004 period from China?s household survey. We find that China?s household saving rate has been high and rising and that the main determinants of variations over time and over space therein are the lagged saving rate, the income growth rate, (in many cases) the real interest rate, and (in some cases) the inflation rate. However, we find that the variables relating to the age structure of the population have the expected impact on the household saving rate in only one of the four samples. These results provide mixed support for the life cycle hypothesis as well as the permanent income hypothesis, are consistent with the existence of inertia or persistence, and imply that China?s household saving rate will remain high for some time to come.

Is the Eldest Son Different? The Residential Choice of Siblings in Japan

In this paper, we analyze the determinants of the living arrangements (coresidence behavior) of elderly parents and their children (whether elderly parents live with their children, and if so, with which child) in Japan using micro data from a household survey. Our results provide support for all four explanations of coresidence behavior but especially for the life cycle and dynasty models (both of which assume selfishly motivated parents) and social norms and traditions: The fact that parents who were self-employed before retirement are more likely to live with their children, the fact that parents are less likely to live with sons who adopt their wife’s surname, and the fact that parents are more likely to live with daughters whose husbands adopt their surname constitute evidence in favor of the dynasty model. The fact that parents who were (relatively wealthy) executives before retirement and parents who are homeowners are more likely to live with their children and the fact that parents are more likely to live with less educated children constitute evidence in favor of the selfish life cycle model (or the altruism model). And the fact that parental attitudes toward their children affect their coresidence behavior, the fact that parents are more likely to live with their eldest child if their eldest child is a son, and the fact that parents are most likely to live with their eldest son even if he is not the eldest child constitute evidence in favor of social norms and traditions.