Household Saving Rates and the Design of Social Security Programmes: Evidence from a Country Panel

Richard Disney

No 1541, CESifo Working Paper Series from CESifo

Abstract: I argue that the offsetting effect of social security contributions on household retirement saving depends on how closely the social security programme imitates a private retirement saving plan (i.e. the ‘actuarial’ component of the social security programme) – the closer the design of the programme to a private retirement saving plan, the higher the offset. I estimate the determinants of household saving rates in a cross-country panel, augmenting standard measures of social security programme generosity and cost by indicators that proxy the actuarial component of the programme. These indicators affect saving rates as predicted; moreover they also affect labour force participation rates of older women (but not men). The findings are consistent with the view that more actuarially-based public programmes are treated by participants as a mandatory saving programme rather than as a tax-and-transfer system, thereby raising labour force participation rates but also increasing the programme’s substitutability for private retirement saving.

Keywords: social security reform; household saving (search for similar items in EconPapers)
JEL-codes: E21 G23 H24 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-fin, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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