Gender effects on aggregate saving: A Theoretical and Empirical Analysis

This study investigates the hypothesis that shifts in women’s relative income, which affects their bargaining power in the household, have discernible effects on aggregate saving due to differing saving propensities by gender. An analytical framework for pooled and non-pooled savings households is developed to examine why women and men’s saving propensities may differ and how a change in women’s wage earnings relative to men’s influences household savings. An empirical analysis is conducted using panel data for a set of 20 semi-industrialized economies, covering the period 1975-95. The results indicate that as some measures of women’s discretionary income and bargaining power increase, aggregate saving rates rise, implying a significant effect of gender on aggregate savings. These findings demonstrate the importance of understanding gender relations at the household level in planning for savings mobilization and in the formulation of financial and investment policies.