The Impact of Superannuation on Household Saving

Ellis Connolly and Marion Kohler
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Ellis Connolly: Reserve Bank of Australia

RBA Research Discussion Papers from Reserve Bank of Australia

Abstract: Over the last 20 years superannuation has grown to be the second largest component of household wealth in Australia after ownership of dwellings. This paper analyses the impact on household saving behaviour of the substantial rise in compulsory contributions to superannuation funds. Our analysis takes account of other macroeconomic developments that are likely to have had a strong influence on the household saving rate over this period, especially the financial deregulation of the 1980s and the unprecedented increase in the value of household wealth in the 1990s. We first illustrate the effect of superannuation on household saving in a small theoretical model, also taking account of the effect financial deregulation and capital gains might have on saving. In an empirical model of saving motivated by our theoretical analysis, we find evidence that only part of compulsory superannuation contributions has been offset by reductions in other saving, suggesting that – other things being equal – compulsory superannuation has indeed resulted in higher household saving.

Keywords: superannuation; household saving; offset coefficient (search for similar items in EconPapers)
JEL-codes: E21 G11 G2 (search for similar items in EconPapers)
Date: 2004-03
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp2004-01

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