An Overlooked Explanation of the Declining Saving Rate.

With a socioeconomic model of the determinants of savings that takes into account variables reflecting the abrupt changes in the divorce rate that occurred during the 1970s and the 1980s in the U.S., the increase in women's participation in the labor force, and their greater investment in education, we explain part of the measured decline in the saving rate. The uncertainty generated by the increased likelihood of divorces encourages households and women, in particular, to substitute human capital to financial or physical capital for precautionary savings.