Applying Quantile Regression to Determine The Effects of Household Characteristics on Household Saving Rates in Vietnam

Abstract

Considering the possible heterogeneity of household saving propensities, we estimate the effects of household characteristics on Vietnamese household saving rates by means of a quantile regression approach using the VHLSS 2010 dataset. Our results suggest that the way household characteristics influence saving rates is different for each quantile. Household characteristics tend to have stronger effects at lower quantiles of the household saving rate distribution. Particularly, the marginal propensity to save of households at low quantiles is higher than those at high quantiles. Analysing rural and urban households separately, we find evidence that household and household head characteristics have stronger significant effects for rural than for urban households. Last but not least, as not as we expected, children and elderly members should be treated as part of the household labor force, instead of household dependency, since both of them increase household saving rates. Our research contributes to the literature on Vietnamese household saving behaviours, especially in the case of urban areas.