Demographic Transition and Saving Behaviour: A Study of 45 Developing Countries

Abstract

Therefore, This paper makes the attempt to empirically probe into the effect of demographic transition (measured by working age population ratio) on domestic savings in 45 developing countries over the period from 2000 to 2020. The paper also estimates the effect of important macroeconomic variables including economic growth, inflation and interest rate on domestic savings. Dynamic panel estimation methodology of Generalized Methods of Movement (GMM) Model has been employed to carry out empirical analysis. From our findings, the rise in the ratio of working-age population and the level of economic growth are found to have positive impact, whereas inflation and interest rate are found have negative impact on domestic savings. On the basis of these findings, the governments in selected countries are recommended to reap the benefits of “Golden Population Structure” by implementing efficient policies, such as creation of appropriate mix of jobs, provision of more opportunities for employment and for the improvement of the productivity of the working age population.