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Do the rich save more in Latin America?

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  • Néstor Gandelman

    (Universidad ORT Uruguay)

Abstract

This paper reports evidence that the savings rate of the rich is higher than that of the poor in Brazil, Chile, Costa Rica, Ecuador, Honduras, Mexico, Panama, Paraguay and Peru. On average, the difference between the fifth and fourth income quintile groups is 7 percentage points. No differences between income groups are found in Uruguay and the results for Argentina and Colombia are not robust to estimation alternatives. The key methodological step is to construct a measure of lifetime income. Current income is not a good proxy since it is affected by phases of the life cycle and transitory shocks. We implement a two-stage procedure based on the education level of the household head and the education level of his/her partner. Several robustness exercises are reported for different age groups, inclusion/exclusion of outliers and for a wealth index based on homeownership, home appliances and other household owned assets.

Suggested Citation

  • Néstor Gandelman, 2017. "Do the rich save more in Latin America?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 75-92, March.
    • Handle: RePEc:spr:joecin:v:15:y:2017:i:1:d:10.1007_s10888-016-9345-3
    DOI: 10.1007/s10888-016-9345-3
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    Cited by:

    1. Gandelman, Néstor & Lluberas, Rodrigo, 2022. "Wealth in Latin America," Research Department working papers 1904, CAF Development Bank Of Latinamerica.
    2. Tabata, Ken, 2024. "Redistributive policy and R&D-based growth," Journal of Macroeconomics, Elsevier, vol. 79(C).
    3. Nora Lustig & Valentina Martinez Pabon & Guido Neidhöfer & Mariano Tommasi, 2020. "Short and Long-Run Distributional Impacts of COVID-19 in Latin America," Working Papers 2013, Tulane University, Department of Economics.
    4. Clementi,Fabio & Fabiani,Michele & Molini,Vasco & Schettino,Francesco, 2022. "Is Inequality Systematically Underestimated in Sub-Saharan Africa ? A Proposal toOvercome the Problem," Policy Research Working Paper Series 10058, The World Bank.
    5. Naeem Akram, 2023. "Household’s Saving Behaviour in Pakistan: A Micro-Data Analysis," Studies in Microeconomics, , vol. 11(2), pages 139-156, August.
    6. Gandelman, Néstor & Serebrisky, Tomás & Suárez-Alemán, Ancor, 2019. "Household spending on transport in Latin America and the Caribbean: A dimension of transport affordability in the region," Journal of Transport Geography, Elsevier, vol. 79(C), pages 1-1.
    7. Daniel Spiro, 2021. "An Open-Economy Ramsey-Cass-Koopmans Model in Reduced Form," CESifo Working Paper Series 9293, CESifo.
    8. Simon Fan & Yu Pang & Pierre Pestieau, 2022. "Investment in children, social security, and intragenerational risk sharing," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(2), pages 286-315, April.
    9. Gustav Engström & Johan Gars & Niko Jaakkola & Therese Lindahl & Daniel Spiro & Arthur A. van Benthem, 2020. "What Policies Address Both the Coronavirus Crisis and the Climate Crisis?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 789-810, August.
    10. Baselgia, Enea & Foellmi, Reto, 2022. "Inequality and Growth: A Review on a Great Open Debate in Economics," CEPR Discussion Papers 17483, C.E.P.R. Discussion Papers.
    11. F. Clementi & A. L. Dabalen & V. Molini & F. Schettino, 2020. "We forgot the middle class! Inequality underestimation in a changing Sub-Saharan Africa," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(1), pages 45-70, March.
    12. Nicolas Garrido & Jeffrey Morales, 2023. "An analysis of the effect of fiscal expenditure on the income distribution of Chilean households," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 12(1), pages 1-19, December.
    13. repec:dpr:wpaper:1241r is not listed on IDEAS
    14. Mika Akesaka & Ryo Mikami & Yoshiyasu Ono, 2024. "Insatiable Wealth Preference: Evidence from Japanese Household Survey," Discussion Paper Series DP2024-16, Research Institute for Economics & Business Administration, Kobe University, revised Oct 2024.
    15. Gandelman, Néstor, 2015. "A Comparison of Saving Rates: Micro Evidence from Seventeen Latin American and Caribbean Countries," IDB Publications (Working Papers) 7136, Inter-American Development Bank.
    16. Gandelman, Néstor & Lluberas, Rodrigo & Misail, Daniel & IDB Invest, 2023. "The Impact of a Financial Inclusion Program on Household’s Payment Choice, Savings, and Credit," IDB Publications (Working Papers) 12769, Inter-American Development Bank.
    17. Madeira, Carlos, 2022. "The impact of the Chilean pension withdrawals during the Covid pandemic on the future savings rate," Journal of International Money and Finance, Elsevier, vol. 126(C).
    18. repec:dpr:wpaper:1241 is not listed on IDEAS
    19. Stephan Litschig & María Lombardi, 2019. "Which tail matters? Inequality and growth in Brazil," Journal of Economic Growth, Springer, vol. 24(2), pages 155-187, June.
    20. Xiuxiu Jiang & Xia Wang & Jia Ren, 2024. "Exploring the Multiple Combinations of Individual Capital and Institutional Contexts for High Levels of Entrepreneurial Activity," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 14643-14669, September.
    21. Nizam, Ahmed Mehedi, 2021. "Effect of Government Transfer on Money Supply: A Closer Look into the Interaction Between Monetary and Fiscal Policy," MPRA Paper 109394, University Library of Munich, Germany.
    22. Santiago Acerenza & Néstor Gandelman, 2017. "Household Education Spending in Latin America and the Caribbean: Evidence from Income and Expenditure Surveys," IDB Publications (Working Papers) 98120, Inter-American Development Bank.
    23. Dr. Alain Galli & Dr. Rina Rosenblatt-Wisch, 2022. "Analysing households' consumption and saving patterns using tax data," Working Papers 2022-03, Swiss National Bank.

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    More about this item

    Keywords

    Savings rates; Two-stage estimation; Median regressions; Latin America;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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