Decomposition of effects of social security on private savings

The main aim of this paper is to decompose the effects of social security on private savings and quantify to what extent each factor that impacts saving behavior account for the effects of social security. For this purpose, I estimate a stochastic dynamic model in which households facing income and...

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Bibliographic Details
Published inJournal of pension economics & finance Vol. 11; no. 3; pp. 419 - 438
Main Author HONG, MINKI
Format Journal Article
LanguageEnglish
Published Cambridge, UK Cambridge University Press 01.07.2012
Subjects
Age
Employees
Enforcement
Labor supply
Participation
Retirement
Self employment
Small business
Social security
Social security
dynamic model
savings
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Summary:The main aim of this paper is to decompose the effects of social security on private savings and quantify to what extent each factor that impacts saving behavior account for the effects of social security. For this purpose, I estimate a stochastic dynamic model in which households facing income and survival uncertainty choose optimal levels of consumption, asset holdings and labor supply. In this model, social security pensions reduce private assets by less than 10%. Bequest and precautionary savings motives are the main reasons of this partial offset. Uncertainty on future benefits has no role to play on the effect.
ISSN:1474-7472
1475-3022
DOI:10.1017/S1474747212000017