Original scientific paper
https://doi.org/10.1080/1331677X.2021.1984269
Age structure of the population and the choice of household financial assets
Chenyu Kang
Ridong Hu
Abstract
China is undergoing changes in its demographic structure, and
the burden of raising children and caring for the elderly is negatively affecting the welfare of Chinese families. Optimising the
financial structure of households may be an effective solution.
Using data from the 2017 Chinese Household Finance Survey, in
this study, we empirically analyse how the age structure of the
population affects a household’s finances by applying probit and
tobit models. It was found that an increase in the proportion of
infants in a family has a crowding-out effect on its investment in
risky and deposit assets, and an increase in the proportion of elderly family members encourages the replacement of risky assets
with savings. Further mechanism tests showed that the presence
of infants affects the choice of financial assets by crowding a family’s labour or leisure time, increasing expenditures, and changing
a family’s cash demand, while the presence of the elderly changes
household finances because a family’s risk preferences are altered
by the weakened cognitive abilities of the elderly. Finally, in this
article, we advance some policy suggestions, such as regulating
capital market management, increasing birth subsidies, and
improving the financial literacy of the elderly, to ensure future
pension security
Keywords
population age structure; household financial assets; money demand; risk preference; cognitive ability
Hrčak ID:
302489
URI
Publication date:
31.3.2023.
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