Evolution, Importance and Correlates of Household Savings in Bolivia

Available from: 
June 2015
Paper author(s): 
Werner L. Hernani-Limarino
Wilson Jiménez
Gary Mena
Microeconomics - Competition - Productivity
Poverty - Inequality - Aid Effectiveness

This document characterizes saving patterns in Bolivia at the aggregate and sectoral level. Bolivia’s accumulated economic growth during 1990-2013 is one of the highest in the region and the country witnessed important reductions in its levels of poverty and inequality measured by income during the 2000’s. Our results show that the important increase in domestic saving rates during the 2000’s was influenced mainly by the increment in household saving rates during 2001-2004 and the general government during 2005-2007 and not by their relative contribution (size) to the economy. The increment in public saving rates is a consequence of new taxes on hydrocarbons and increments in the international prices in the hydrocarbon and mining sector. Using household survey data we show that the increase in household saving rates is the result of important increments in saving rates of younger cohorts in rural households and among the less less educated. Saving rates of the more educated newer cohorts is decreasing, however, which means that as the process of human capital accumulation continues household saving rates are likely to remain equal or fall. Our results also suggest that alternative forms of savings include durables and dwelling ownership and that rural households use self-consumption as a form of saving that allows them to smooth consumption.


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