We examine whether access to higher education impacts household saving rates. A 2-period model of household saving decisions demonstrates why increased college opportunities induce households with children to save more. We examine this theory using survey data from Chinese households during the unprecedented education expansion. Using estimates of the change in the expected probability of college attendance, we estimate the effect on household saving rates by comparing households before and after the reform. We find that a 10-percentage point increase in the probability of going to college raises the saving rate by 5.9 percentage points.

Bollinger, Christopher, Xiaozhou Ding, and Steven Lugauer. The Expansion of Higher Education and Household Saving in China. China Economic Review 71 (2022): e101736. https://www.sciencedirect.com/science/article/abs/pii/S1043951X21001541

Xiaozhou Ding is a professor of Economics at Dickinson College.

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