The goal of the research is to study the effects of demographic change, particularly of population aging, or patterns of saving and inequality using data from East Asia, the United States and Great Britain. The use of the data from both developing and developed countries allows an explicitly comparative approach, which will be pursued, not at the level of national aggregates, but by comparing the internal structure of the economies using microeconomic data or household behavior. Time-series of household surveys for each country will be used to decompose earnings, incomes, savings rate, and inequality in income and consumption into components attributable to age and cohort effects. Isolation of age effects will allow an assessment of the contribution of demographic structure to differences in national levels of saving and inequality, both over time within countries and across countries. The proposed research has several specific aims: (1) To assess likely changes in saving, inequality, and poverty as populations age. (2) To examine the implication of standard life-cycle theories of savings for inequality in income and consumption. (3) To understand better the relationship between inequality and economic development (the Kuznets curve), with particular emphasis on the relationship between economic growth, population aging through demographic transition, and widening inequality. (5) To consider the effects of social security systems in developing countries, and the extent to which the introduction of such systems is likely to affect saving, inequality, and poverty. (6) To contribute more generally to our understanding of saving, to try to draw lessons from the high saving, high growth countries of East Asia for low growth, low savings countries like the US and the UK, and to draw lessons about aging and social security systems from the experience of the US and the UK to help guide policy in developing countries.
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