This paper examines the relationship between household savings
and family size. Household savings are important indicators of family
welfare, not only in terms of a household's investment and income
generation prospects, but also, and perhaps more importantly—
given pervasive borrowing constraints and limited social security
coverage—in terms of its ability to secure protection from income
shortfalls. This paper also provides descriptive and multivariate evidence
on the relationship of household savings and family size. It
also rightly considers the endogeneity of family size in the household
savings equation, as argued in the old-age security hypothesis,
by using the instrumental variables estimation technique.
The paper likewise uses a recent nationally representative household
survey in the analysis. The results show that, on average, the
impact of additional children on household savings is both negative
and regressive.