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The Crowding-out Effect of Mandatory Labour Market Pension Schemes on Private Savings. Evidence from renters in Denmark. CEPS Working Document No. 389, February 2014

Arnberg, Soren and Barslund, Mikkel (2014) The Crowding-out Effect of Mandatory Labour Market Pension Schemes on Private Savings. Evidence from renters in Denmark. CEPS Working Document No. 389, February 2014. [Working Paper]

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    Abstract

    This paper aims to estimate the crowding-out effect of the Danish mandatory labour market pension reforms begun in 1993 on the level of total household savings for renters. The effect is identified via a large panel of individual administrative records utilising the differences in speed, timing and sectoral coverage of the implementation of the reform in the period 1997 to 2005. Little substitutability was found between current mandatory labour market pension savings and private voluntary savings. Each euro paid into mandatory labour market pension accounts results in a reduction in private savings of approximately 0 to 30 cents, depending on age. This low rate of substitution is only, to a minor extent, explained by liquidity constraints. The results point to mandatory pension savings having a large effect on total household savings. Thus, pension reforms that introduce mandatory savings have macroeconomic implications.

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    Item Type: Working Paper
    Subjects for non-EU documents: Countries > Denmark
    EU policies and themes > Policies & related activities > social policy > welfare state
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Working Documents
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 01 Apr 2014 13:57
    Number of Pages: 25
    Last Modified: 01 Apr 2014 13:57
    URI: http://aei.pitt.edu/id/eprint/50139

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