Life Cycle Savings in a High-Informality Setting : Evidence from Pakistan
The combined forces of population aging, weakening family and village risk-sharing networks, and low formal pension coverage will make financing elderly consumption a major challenge for the future. This study examines whether households in high-in...
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| Format: | Working Paper |
| Language: | English en_US |
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Washington, DC : World Bank
2022
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| Online Access: | http://documents.worldbank.org/curated/en/099335107072219949/IDU0bb79ceea0247c040340b67c085a6df6f5df5 http://hdl.handle.net/10986/37666 |
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okr-10986-376662022-07-09T05:10:38Z Life Cycle Savings in a High-Informality Setting : Evidence from Pakistan Joubert, Clément Kanth, Priyanka AGING POPULATION PENSION SYSTEM SAVINGS SOCIAL PROTECTION INFORMALITY LIVING STANDARDS The combined forces of population aging, weakening family and village risk-sharing networks, and low formal pension coverage will make financing elderly consumption a major challenge for the future. This study examines whether households in high-informality settings, where participation in pension schemes is rare, accumulate wealth over the life cycle and what mix of assets and liabilities composes that wealth. Pakistan is an ideal setting, with 88.5 percent of the population in informal employment and limited wide-scale social protection targeting the elderly. Data on housing wealth, land holdings, financial wealth, household durables, and owned businesses are assembled from eight rounds of representative household surveys that span 18 years (2001–18). Changes associated with age are disentangled from differences between cohorts and year effects by applying decomposition analysis. The average informal Pakistani household accumulates 4.2 years’ worth of consumption between the head’s ages of 25 and 65, mostly in the form of residential housing. Wealth accumulation is slower early in the life cycle and picks up speed between ages 40 and 65. Land is an important part of rural households’ portfolio but grows little over the life cycle (10 months’ worth). More liquid forms of wealth such as financial wealth also grow with age, but in much more modest amounts. Overall, consistent with improving living standards and expectations that family support may be less available than in the past, the fraction that reaches old age with significant net worth has increased over the period analyzed, suggesting a potential demand for long-term saving schemes designed for the informal sector. 2022-07-08T18:43:10Z 2022-07-08T18:43:10Z 2022-07 Working Paper http://documents.worldbank.org/curated/en/099335107072219949/IDU0bb79ceea0247c040340b67c085a6df6f5df5 http://hdl.handle.net/10986/37666 English en_US Policy Research Working Paper;10121 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC : World Bank Publications & Research Publications & Research :: Policy Research Working Paper South Asia Asia Pakistan |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AGING POPULATION PENSION SYSTEM SAVINGS SOCIAL PROTECTION INFORMALITY LIVING STANDARDS |
| spellingShingle |
AGING POPULATION PENSION SYSTEM SAVINGS SOCIAL PROTECTION INFORMALITY LIVING STANDARDS Joubert, Clément Kanth, Priyanka Life Cycle Savings in a High-Informality Setting : Evidence from Pakistan |
| geographic_facet |
South Asia Asia Pakistan |
| relation |
Policy Research Working Paper;10121 |
| description |
The combined forces of population
aging, weakening family and village risk-sharing networks,
and low formal pension coverage will make financing elderly
consumption a major challenge for the future. This study
examines whether households in high-informality settings,
where participation in pension schemes is rare, accumulate
wealth over the life cycle and what mix of assets and
liabilities composes that wealth. Pakistan is an ideal
setting, with 88.5 percent of the population in informal
employment and limited wide-scale social protection
targeting the elderly. Data on housing wealth, land
holdings, financial wealth, household durables, and owned
businesses are assembled from eight rounds of representative
household surveys that span 18 years (2001–18). Changes
associated with age are disentangled from differences
between cohorts and year effects by applying decomposition
analysis. The average informal Pakistani household
accumulates 4.2 years’ worth of consumption between the
head’s ages of 25 and 65, mostly in the form of residential
housing. Wealth accumulation is slower early in the life
cycle and picks up speed between ages 40 and 65. Land is an
important part of rural households’ portfolio but grows
little over the life cycle (10 months’ worth). More liquid
forms of wealth such as financial wealth also grow with age,
but in much more modest amounts. Overall, consistent with
improving living standards and expectations that family
support may be less available than in the past, the fraction
that reaches old age with significant net worth has
increased over the period analyzed, suggesting a potential
demand for long-term saving schemes designed for the
informal sector. |
| format |
Working Paper |
| author |
Joubert, Clément Kanth, Priyanka |
| author_facet |
Joubert, Clément Kanth, Priyanka |
| author_sort |
Joubert, Clément |
| title |
Life Cycle Savings in a High-Informality Setting : Evidence from Pakistan |
| title_short |
Life Cycle Savings in a High-Informality Setting : Evidence from Pakistan |
| title_full |
Life Cycle Savings in a High-Informality Setting : Evidence from Pakistan |
| title_fullStr |
Life Cycle Savings in a High-Informality Setting : Evidence from Pakistan |
| title_full_unstemmed |
Life Cycle Savings in a High-Informality Setting : Evidence from Pakistan |
| title_sort |
life cycle savings in a high-informality setting : evidence from pakistan |
| publisher |
Washington, DC : World Bank |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/099335107072219949/IDU0bb79ceea0247c040340b67c085a6df6f5df5 http://hdl.handle.net/10986/37666 |
| _version_ |
1764487629647118336 |