Population ageing, taxation, pensions and health costs, CHERE Working Paper 2007/10

principal component of mortgage repayments, capital housing costs and
superannuation and life insurance. ²⁷

Figure 5 plots the lifecycle profiles of median saving for each household group, and
the profile for the full sample. The figure shows graphically the strong tendency for
household saving to track female labour supply. This is not a surprising, given that
the H1 household has chosen to substitute domestic for market work and therefore has
less market income available for the purpose of saving. Median household saving by
H1 households is well below that by H2 households from phase 2 to retirement. In
phase 1, median saving is high because almost all female partners work full time. In
phase 2 there is a sharp fall in the median of the full sample, due to a dramatic fall in
the saving of H1. The median saving of the H1 household is actually negative in
phases 2 and 3.

Figure 5: Lifecycle saving by household type

--All       h H1
♦ H2

Again the diverse decisions of the two household groups cannot be attributed to
family size or, in this case, to the effects of family size on labour supply and therefore
on earnings, for two reasons. First, the household groups have close to the same

²⁷ Note that total expenditure includes income tax and so saving is, in effect, computed as net income
less consumption expenditure.

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