Saving, Wealth, and the Transition from Transfers to Individual Responsibility: The Cases of Taiwan and the United States. under review

Abstract: Under the lifecycle saving model, population aging leads to an increased demand for lifecycle wealth. Changes in transfer systems create or destroy one component of lifecycle wealth- transfer wealth. The decline in the familial transfer system in Taiwan and reform of the US Social Security system are two examples of ways that transfer wealth is reduced. The combined effects of aging and changes in transfer systems are analyzed using simulation analysi. Rapid aging and radical decline in transfer systems lead to a large but transitory surge in aggregate saving. Capital per worker increases rapidly and remains at a high level