The Effect of Workplace Pensions on Household Saving: Evidence From a Natural Experiment in Taiwan

Tzu‐Ting Yang

Journal of Risk & Insurance, 2020, vol. 87, issue 1, 173-194

Abstract: Population aging causes financial imbalances in pay‐as‐you‐go public pension programs. To remedy this problem, while ensuring the adequacy of retirement savings for employees, many countries complement or substitute public pensions by regulating their workplace pensions. This article exploits a pension reform in Taiwan that has mandated, since 2005, that all private‐sector employers contribute at least 6 percent of an employee's monthly wage to an individual pension account. I use workers in the unaffected sectors as a comparison group and employ a difference‐in‐differences method to estimate the impact of the reform on household saving rates. My estimates suggest that making private pensions mandatory significantly reduces the household saving rate by between 2.06 and 2.45 percentage points, thus implying that a $ 10 increase in the workplace pension could offset $ 5 to $ 6 of household savings.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/jori.12254

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jrinsu:v:87:y:2020:i:1:p:173-194

Ordering information: This journal article can be ordered from
http://www.wiley.com/bw/subs.asp?ref=0022-4367

Access Statistics for this article

Journal of Risk & Insurance is currently edited by Joan T. Schmit

More articles in Journal of Risk & Insurance from The American Risk and Insurance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().