Distributional effects of subsidizing retirement savings accounts: Evidence from Germany

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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.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Diskussionsbeiträge ; No. 2015/18

Classification and Topics

• Classification: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Social Security and Public Pensions ; Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions ; Household Saving; Personal Finance ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
• Subject: saving subsidies ; retirement plans ; income distribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Corneo, Giacomo ; Schröder, Carsten ; König, Johannes
• Event: Veröffentlichung
• (who): Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft
• (where): Berlin
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/110989