Dependency Rate and Savings: The African Evidence with Panel Data

Abstract

This study examines the impact of the age dependency ratio on domestic savings rates. We test this issue for 16
African countries using annual panel data. The empirical analysis was conducted using the panel unit roots, panel
cointegration and panel causality tests. The empirical findings indicate evidence of panel cointegration.
Furthermore, results from panel causality analysis reveal that dependency ratio causes savings rate negatively.
Overall, our findings support the view that changes in non-working population size are important in explaining
the future path of domestic savings rates in Africa.