Abstract
This paper reports evidence that the savings rate of the rich is higher than that of the poor in Brazil, Chile, Costa Rica, Ecuador, Honduras, Mexico, Panama, Paraguay and Peru. On average, the difference between the fifth and fourth income quintile groups is 7 percentage points. No differences between income groups are found in Uruguay and the results for Argentina and Colombia are not robust to estimation alternatives. The key methodological step is to construct a measure of lifetime income. Current income is not a good proxy since it is affected by phases of the life cycle and transitory shocks. We implement a two-stage procedure based on the education level of the household head and the education level of his/her partner. Several robustness exercises are reported for different age groups, inclusion/exclusion of outliers and for a wealth index based on homeownership, home appliances and other household owned assets.
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Gandelman, N. Do the rich save more in Latin America?. J Econ Inequal 15, 75–92 (2017). https://doi.org/10.1007/s10888-016-9345-3
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DOI: https://doi.org/10.1007/s10888-016-9345-3