Savings of low-income households in Mexico -: Cohort analysis

This paper presents saving rate decomposition for Mexican households in 1984-1996 using a synthetic panel. The analysis focuses on low-income households and their saving rate through the life cycle. Our results show that saving rate in poorer households is higher at the beginning and the end of the life cycle, due to liquidity constraints and the precautionary motive, respectively. We recommend promoting the access to capital markets and the creation of social nets to reduce income uncertainty and volatility for low-income households.