Public Pensions and Private Savings
American Economic Journal: Economic Policy
vol. 16,
no. 2, May 2024
(pp. 366-405)
Abstract
How does the provision of public pension benefits impact private savings? We answer this question in the context of a Danish reform that increased social security eligibility ages. Using administrative data and a regression discontinuity design, we identify the causal effects of the policy on savings throughout the financial portfolio. We find increases in contributions to personal and employer-sponsored retirement accounts when delayed benefit eligibility induces extended employment. We argue that inertia—the continuation of previous savings behaviors—is a key mechanism, and we highlight how firm default contribution rate policies can mediate savings responses to social security reform.Citation
García-Miralles, Esteban, and Jonathan M. Leganza. 2024. "Public Pensions and Private Savings." American Economic Journal: Economic Policy, 16 (2): 366-405. DOI: 10.1257/pol.20220019Additional Materials
JEL Classification
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- H55 Social Security and Public Pensions
- J22 Time Allocation and Labor Supply
- J26 Retirement; Retirement Policies
- J32 Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
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