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The Announcement of Increasing-Retirement-Age Policy and Changes in Saving Rates of Urban Households

【Authors】
LIU Can, LING Chen & ZOU Hong
【WorkUnit】
LIU Can (Southwestern University of Finance and Economics, 611130)LING Chen (Zhejiang University of Finance and Economics, 310018)ZOU Hong (Southwestern University of Finance and Economics, 611130)
【Abstract】

An unspecified policy to be implemented is able to make real effects on the economy, with anticipation playing an important role. This paper studies the effect of the announcement of increasing-retirement-age policy has on the urban households' saving rate based on China Family Panel Studies (CFPS) data. We first find a strong announcement effect that urban households' saving rate fall significantly via an anticipation of income increase mainly: the household, on average, decreases its saving rate by 5% for each additional labor force, or 0.2% for each extra year to mandatory retirement. This effect differs dramatically across the households. Specifically, the households with more attention to social and economic news or closer to retirement are more sensitive to the announcement, but those with higher saving rate, higher wealth income proportion are relatively more difficult to decrease their saving rates. The policy implication is that the increasingretirement-age policy could effectively reduce the urban households' saving rate, but it requires flexible implementation. The policy makers should shed light on their follow-up arrangements to stabilize the anticipation of households as soon as possible.
 
JEL: D11, D12, E21

【KeyWords】
Increasing-retirement-age Policy, Announcement Effect, Household Saving Rate, Difference-in-Difference