Aging and Household Economic Vulnerability: Perspective from Asset Allocation

Based on the microdata from the China Household Finance Survey (CHFS), this paper empirically studies the impact of aging on household economic vulnerability from the asset allocation perspective. Households can be classified into four categories according to the allocation of liquid and non-liquid assets: P-HtM (poor hand-to-mouth), W-HtM (wealthy hand-to-mouth), P-nHtM (poor non-HtM) and W-nHtM (wealthy non-HtM). The results show that the elderly ratio will significantly amplify household economic vulnerability, and only W-HtM households can significantly alleviate this effect. The elderly ratio mainly enlarges household economic vulnerability by increasing health risks. Heterogeneity tests show that the impact of aging on household economic vulnerability is more pronounced for younger householders, midwest households, and non-stable employment households. The findings provide several policy implications for supervising and preventing household economic risks under the background of rapid aging in China.