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Early twentieth-century Japanese worker saving: precautionary behaviour before a social safety net

Author

Listed:
  • John A. James

    (Department of Economics, University of Virginia, PO Box 400182, Charlottesville, VA 22904, USA)

  • Isao Suto

    (School of Economics and Political Science, Meiji University, Tokyo, Japan)

Abstract

This paper pools data from independent household surveys of Japanese workers roughly spanning the Taisho period (1912–1926), a time before private-business or government-provided social safety nets. First, we construct estimates of permanent and transitory income and then estimate saving functions consistent with intertemporal optimization. The saving behaviour of Japanese worker households is in turn compared with that of American worker households before World War I, a time when they too lacked access to general social services. The estimated marginal propensities to save out of permanent and transitory incomes were quite similar for Japanese and American worker households, but the Japanese ones saved more at a given level of income. The economic environment facing Japanese workers, however, seemed to be no riskier than that facing American workers. We attribute instead this result primarily to the widespread postal savings banks in Japan which increased the convenience and decreased the risk of saving.

Suggested Citation

  • John A. James & Isao Suto, 2011. "Early twentieth-century Japanese worker saving: precautionary behaviour before a social safety net," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 5(1), pages 1-25, January.
    • Handle: RePEc:afc:cliome:v:5:y:2011:i:1:p:1-25
    DOI: 10.1007/s11698-010-0051-2
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    Citations

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    Cited by:

    1. Kota Ogasawara & Ian Gazeley & Eric B. Schneider, 2020. "Nutrition, Crowding, And Disease Among Low‐Income Households In Tokyo In 1930," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 60(1), pages 73-104, March.
    2. Ogasawara, Kota, 2018. "Health and education during industrialization: Evidence from early twentieth century Japan," International Journal of Educational Development, Elsevier, vol. 61(C), pages 40-54.
    3. Tatsuki Inoue, 2023. "Health Impacts of Public Pawnshops in Industrializing Tokyo," Papers 2305.09352, arXiv.org, revised May 2024.
    4. Kota Ogasawara, 2018. "Consumption smoothing in the working-class households of interwar Japan," Papers 1807.05737, arXiv.org, revised Feb 2024.
    5. Tatsuki Inoue, 2019. "The role of pawnshops in risk coping in early twentieth-century Japan," Papers 1905.04419, arXiv.org, revised Aug 2019.
    6. Kota Ogasawara, 2023. "Consumption Smoothing in Metropolis: Evidence from Working-class Households in Prewar Tokyo," Papers 2311.14320, arXiv.org, revised Sep 2024.

    More about this item

    Keywords

    Social safety net; Precautionary saving; Worker surveys; Taisho era; Postal savings;
    All these keywords.

    JEL classification:

    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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