Details

Subject(s)

• Population aging [Browse]

Author

• Kanth, Priyanka [Browse]

Series

Policy research working papers. [More in this series]

Summary note

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.

Source of description

Description based on publisher supplied metadata and other sources.

Other standard number

• 10.1596/1813-9450-10121

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