Does Social Security crowd out Private Savings? The Case of Bismarck’s System of Social Insurance

Sibylle Lehmann-Hasemeyer and Jochen Streb

No 06-17, IBF Paper Series from IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main

Abstract: Imperial chancellor Bismarck’s system of social insurance (with its three pillars health, accident and pension insurance) was an important role model for social security systems across Europe and in the US. How the introduction of the German system changed economic expectations and decisions of the German workforce has not been researched, though. This article closes this gap by analyzing the development of Prussian savings banks’ deposits in the late 19th century with the help of a difference-in-difference-like approach. We show that, in the Prussian case, social security crowded out private savings considerably. As counterfactual voluntary savings would have been far from sufficient, however, Bismarck’s social insurance system was still needed to fight the misery workers and their families potentially faced in old age or times of sickness.

JEL-codes: D14 E21 H55 N33 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-age, nep-his, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ibfpps:0617

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