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Distributional effects of subsidizing retirement savings accounts: Evidence from Germany

Giacomo Corneo, Carsten Schröder () and Johannes König

No 2015/18, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: We empirically investigate the distributional consequences of the Riester scheme, the main private pension subsidization program in Germany. We find that 38% of the aggregate subsidy accrues to the top two deciles of the population, but only 7.3% to the bottom two. Nonetheless the Riester scheme is almost distributionally neutral when looking at standard inequality measures. This is due to two offsetting effects: a progressive one stemming from the subsidy schedule and a regressive one from voluntary participation. Regressions of the participation decision suggest that a high level of household wealth significantly increases the probability of benefiting from the Riester scheme.

Keywords: saving subsidies; retirement plans; income distribution (search for similar items in EconPapers)
JEL-codes: D14 D31 H55 I38 J32 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-age, nep-eur and nep-pbe
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Journal Article: Distributional Effects of Subsidizing Retirement Savings Accounts: Evidence from Germany (2018) Downloads
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