The Effect of Public Pension Wealth on Saving and Expenditure

Arbeitspapier

In order to study whether public pension systems displace private saving, we use the quasi-experimental variation in pension wealth created by Poland's 1999 pension reform. Using the 1997–2003 Polish Household Budget Surveys, we begin by estimating "difference-in-differences" regressions, where we compare household saving and expenditure across time and between cohorts affected and unaffected by the reform. Next, we estimate the extent of crowd-out by using two-stage least squares. We identify the effect of pension wealth on private saving by using the cohort-by-time variation in pension wealth that is explained by the reform. We find that one additional Polish zloty, or PLN, of pension wealth crowds out about 0.24 PLN in household saving. We also find heterogeneity in responses. For the middle-aged cohorts, we find a large public pension crowd-out of private saving (about 0.54 PLN of private saving for each 1 PLN of public pension wealth), while the crowd-out for younger cohorts equals about 0.30 PLN of private saving per 1 PLN. Finally, we find a close-to-complete crowd-out among highly-educated households.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 8895

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Consumption; Saving; Wealth ; Social Security and Public Pensions ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs ; Socialist Institutions and Their Transitions: Public Economics
• Subject: pension reforms ; crowd-out effect ; retirement saving ; difference-in-differences ; natural experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lachowska, Marta ; Myck, Michal
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/110172
• Last update: 10.03.2025, 11:42 AM CET