Does Social Security Crowd Out Private Savings? The Case of Bismarck’s System of Social Insurance

Sibylle H. Lehmann-Hasemeyer and Jochen Streb

No 1, Working Papers from German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin

Abstract: Imperial chancellor Bismarck's system of social insurance (with its three pillars health, accident and pension insurance) was an important role model for social security systems across Europe and in the US. How the introduction of the German system changed economic expectations and decisions of the German workforce has not been researched, though. This article tries to close this gap by analyzing the development of Prussian savings banks' deposits in the late 19th century. The introduction of social security can affect private savings in at least two different ways: on the one hand, it might induce households to reduce their precautionary savings; one the other hand, it might give people a reason to reflect on their financial needs at old age or when sick, thereby increasing their motivation to accumulate private savings. To identify the causal effect of social insurance on private savings in Prussia, we employ a difference-in-difference-like approach. We show that, in our example, social security crowded out private savings considerably.

JEL-codes: D14 E21 H55 N33 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/223182/1/SPPWP-01.pdf (application/pdf)

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:zbw:pp1859:1

DOI: 10.18452/5502

Access Statistics for this paper

More papers in Working Papers from German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics (econstor@zbw-workspace.eu).