The Impact of Female Labor Participation on Household Savings Rate

Abstract

The high savings of Chinese families is a widely concerned issue. This paper attempts to explain the high savings of Chinese families from the perspective of female labor participation. Firstly, the relationship between female labor participation and household savings rate is theoretically discussed, and then an empirical test is conducted using the 2017 China Household Financial Survey data. In order to overcome the endogenous influence, the labor participation rate of other married women in the same community and the same age group is used as a tool variable for labor participation of married women in the family, and the influence of labor participation of married women on household savings rate is empirically tested. The results of the study show that labor participation of married women significantly increases household savings rates. Heterogeneity analysis found that married women’s labor participation had a significant impact on the 20- to 30-year-old female family, university and higher education levels, and the savings rate of families who would like be with two children. Further research found that married women’s labor participation in promoting the increase in household savings rate is due to a significant increase in household income levels, while household consumption levels have not changed significantly. At the same time, the current female labor participation did not significantly reduce the family’s preventive saving motivation, but further increased the household savings rate. This paper provides a new perspective for understanding the high savings of Chinese families and can provide a reference for future policy development.