PUBLICATIONS & REPORTS

Contents Introduction

This report examines the saving behavior of households using micro data from Japanese household surveys. It consists of two chapters. The first chapter analyzes the determinants of the wealth decumulation behavior of the retired elderly in Japan, and by so doing, attempts to assess the relative importance of precautionary saving and bequest motives in explaining the lower than expected rates of wealth decumulation of the retired elderly. Our analyses show that precautionary saving plays a relatively important role in explaining the lower than expected wealth decumulation rate of the retired elderly, at least in the case of Japan, even though both precautionary saving and bequest motives are important drivers behind this puzzle. Our results also suggest the possibility that the financial burden of parental care may also affect the wealth decumulation behavior of the retired elderly in Japan. Given that parental care responsibilities tend to arise relatively late in life, often after retirement, in the case of Japan, our results suggest that the financial burden of parental care may be a relevant issue when analyzing the wealth decumulation behavior of the elderly.

The second chapter examines the relationship between marriage and wealth with particular focus on women. By exploiting the availability of data on personal wealth, it assesses whether the wealth effect of marriage differs depending on whether we measure wealth in terms of personal wealth or household wealth, an issue that very few studies have examined thus far. According to the empirical results, if wealth is measured in terms of equivalized household net worth on the assumption that intrahousehold resources are shared equally within married couples, marriage is generally found to help women accumulate wealth. This raises concern about whether never married women, whose number is on the rise in Japan, are accumulating sufficient wealth for old age. By contrast, if wealth is measured in terms of personal net worth based on the actual ownership of assets, marriage is found to be negatively associated with women’s wealth holdings. This is largely due to the fact that a relatively small share of household wealth is held in the wife’s name in the case of Japan. These findings underscore the fact that women in Japan are potentially in a financially vulnerable position even after they marry.