Demographic Dividend and Households Saving in Mexico

The approach of the Demographic Dividends considers that one of the main mechanisms of operation is the savings. The young and the old people consume more than they produce, while population in the working ages tend to have a higher level of economic output and savings. Thus, a demographic structure composed mainly by working age population is expected that have a significant effect on aggregate saving. This document describes the life cycle income, consumption and saving patterns of Mexican households in a context of increasing workforce and a declining ratio of dependents. Since, the life cycle is a longitudinal concept we construct eleven synthetic cohorts from the 1994/2012 National Household Income and Expenditure Survey. Results not show evidence of "hump" saving and the subsequent dissaving; and the level of private savings is very low, both are a sign of waste of the Demographic Dividend.