Demographic Dividends and Households Saving in Mexico

The main element in the Demographic Dividends (DemDiv) is a demographic surplus of working-age population with high levels of employment and productivity, to support children and the elderly and also allowing a significant aggregate savings to be invested to enhance future economic opportunities. This chapter depicts the life-cycle income, consumption, and saving patterns of Mexican households in a context of increasing workforce and a declining ratio of demographic dependency. Since the life-cycle is a longitudinal concept and data comes from cross-sectional panels of the 1994–2012 Household Income and Expenditure Survey, 11 synthetic cohorts are drawn up. Results show that the expected dissaving-saving-dissaving hump shape does not occur. The process rather follows an M shape. Private saving understood as income less consumption is very low suggesting that the first DemDiv is not taking place and that the demographic window is being wasted.