Hostname: page-component-cd9895bd7-jkksz Total loading time: 0 Render date: 2024-12-27T06:34:09.188Z Has data issue: false hasContentIssue false
  • English
  • Français

Decomposition of effects of social security on private savings

Published online by Cambridge University Press:  15 March 2012

MINKI HONG
MINKI HONG
Affiliation:
Korea Labor Institute, Seoul, 150-740, Korea (e-mail: hongminki00@gmail.com)
Get access Rights & Permissions [Opens in a new window]

Abstract

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.

Keywords

Social securitysavingsdynamic model
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 11 , Issue 3 , July 2012 , pp. 419 - 438
Copyright
Copyright © Cambridge University Press 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bernheim, D. (1987) The economic effects of social security: toward a reconciliation of theory and measurement. Journal of Public Economics, 33: 273–304.CrossRefGoogle Scholar
Diamond, P. and Hausman, J. (1984) Individual retirement and savings behavior. Journal of Public Economics, 23: 81–114.CrossRefGoogle Scholar
Dominitz, J., Manski, C. and Heinz, J. (2003) Will social security be there for you?: how americans perceive their benefits. NBER working paper.CrossRefGoogle Scholar
Feldstein, M. (1974) Social security, induced retirement and aggregate capital accumulation. Journal of Political Economy, 82: 905–926.CrossRefGoogle Scholar
Feldstein, M. and Pellechio, A. (1979) Social Security and Household Wealth Accumulation: New Microeconometric Evidence. Review of Economics and Statistics, 61(3): 361–368.CrossRefGoogle Scholar
French, E. (2005) The effects of health, wealth, and wages on labor supply and retirement behavior. Review of Economic Studies, 72(2): 395–427.CrossRefGoogle Scholar
Gale, W. (1998) The effects of pensions on household wealth: a reevaluation of theory and evidence. Journal of Political Economy, 106(4): 706–723.CrossRefGoogle Scholar
Gourinchas, P. and Parker, J. (2002) Consumption over the life cycle. Econometrica, 70(1): 47–89.CrossRefGoogle Scholar
Gullason, E., Bharat, K. and Panik, M. (1993) Social security and household wealth accumulation: refined microeconometric evidence. Review of Economics and Statistics, 75( 3), 548–551.CrossRefGoogle Scholar
Gustman, A. and Steinmeier, T. (1999) Effects of Pensions on Savings: Analysis with Data from the Health and Retirement Study. Carnegie-Rochester Conference Series on Public Policy, 50: 271–324.CrossRefGoogle Scholar
Hall, G. and Rust, J. (2003) Simulated minimum distance estimation of a model of optimal commodity price speculation with endogenously sampled prices. Mimeo.Google Scholar
Hong, M. (2008) Public pension reforms and private savings. Mimeo.Google Scholar
Hubbard, G. (1986) Pension wealth and individual saving: some new evidence. Journal of Money, Credit and Banking, 18; 167–178.CrossRefGoogle Scholar
King, M. and Dicks-Mireaux, L. (1982) Asset Holdings and the Life-Cycle. Economic Journal, 92: 247–267.CrossRefGoogle Scholar
L., Kotlikoff (1979) Testing the theory of social security and life cycle accumulation. American Economic Review, 69: 396–410.Google Scholar
Lise, J., Seitz, S. and Smith, J. (2004) Equilibrium policy experiments and the evaluation of social programs. NBER Working Paper.CrossRefGoogle Scholar
Low, H. (2005) Self-insurance in a life-cycle model of labor supply and savings. Review of Economic Dynamics, 8(4): 945–975.CrossRefGoogle Scholar
McFadden, D. (1989) A method of simulated moments for estimation of discrete response models without numerical integration. Econometrica, 47: 995–1026.CrossRefGoogle Scholar
Novos, I. (1989) Social security wealth and wealth accumulation: further microeconomic evidence. Review of Economics and Statistics, 71(1): 167–171.CrossRefGoogle Scholar
Todd, P. and Wolpin, K. (2008) Assessing the impact of a school subsidy program in mexico: using a social experiment to validate a dynamic behavior model of child schooling and fertility. American Economic Review, 96(5): 1384–1417.CrossRefGoogle Scholar