Abstract
By using a unique dataset of more than 20,000 individuals with savings accounts from August 2019 to October 2020 in South Africa, this paper examines how the COVID crisis has affected savings behavior, and by affecting savings, impacted wealth inequality. We find that while COVID increased savings on average, the increase in average savings is due to a small group of higher income savers which substantially increased their savings, while a large group stopped saving.
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The data in this study is observational, and did not include interventions on the individuals whose data is in this study.
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The data included in this study is administrative data, and does not include an intervention, so informed consent was not necessary.
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One of the authors had other interests. They worked for the banking group whose data is used in the study throughout the period covered by the data. The bank funded their salary through this period. Their role included doing observational and experimental research and fell under the policies of the bank for conducting research.
They no longer work for the banking group. As part of their remuneration structure, they did receive shares in the banking group, some of which they still hold.
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Appendices
Appendix 1
1.1 Explanation of variable names
Variable name | Definition |
---|---|
Sav | Total savings balance in the account at the end of a month |
Savdum | Binary dummy with a one if savings are positive and a zero if savings are 0 |
covid | Binary dummy with zero in months before lockdown (2019: August, September; October; November; December; 2020: January and February) and one from lockdown onwards (2020: March, April, May, June, July, August, September and October) |
i.month | Month dummies. 8, 9, 10, 11, 12 refer to 2019, August, September, October, November and December, respectively; 13, 14, 15, 16, 17, 18, 19, 20, 21, and 22 refer to 2020, January, February, March, April, May, June, July, August, September and October, respectively |
Appendix 2
2.1 Heterogeneous treatment effects with monthly dummies
Table
Table
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Jansen, A., Lensink, R. How did COVID affect savings and wealth? An empirical study in South Africa. J Econ Inequal (2024). https://doi.org/10.1007/s10888-023-09613-6
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DOI: https://doi.org/10.1007/s10888-023-09613-6