Who Benefits from Retirement Saving Incentives in the U.S.? Evidence on Gaps in Retirement Wealth Accumulation by Race and Parental Income

Taha Choukhmane, Jorge Colmenares, Cormac O'Dea, Jonathan Rothbaum and Lawrence Schmidt

No 32843, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: U.S. employers and the federal government devote over 1.5% of GDP annually toward promoting defined contribution (DC) retirement saving. Using a new employer-employee linked dataset covering millions of Americans, we show that this system of saving incentives benefits White workers and those with richer parents more than their similar-income coworkers who are Black or Hispanic or from lower-income families. Breaking the link between contribution choices and saving subsidies—through revenue-neutral reforms—could close the gaps in DC wealth between White and Black or Hispanic workers and between those with the richest and those with the poorest parents by approximately one-third.

JEL-codes: D14 G5 H2 H31 J15 J32 (search for similar items in EconPapers)
Date: 2024-08
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