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The Crowding-out effect of mandatory labour market pensions schemes on private savings: evidence from Denmark Søren Arnberg Danish Economic Councils Mikkel Barslund Danish Economic Councils
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Does mandatory pension savings crowd out private voluntary savings? Relevant for policy makers in two ways: -does mandatory savings increase total savings? -macroeconomic implications Motivation
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Pension wealth and saving rates: King & Dicks-Mireaux (1982), Jappelli (1995), Alessie, Kapteyn & Klijn (1997), Gale (1998), Euwals (2000) Pension entitlements and private savings: Attanasio & Rohwedder (2003), Attanasio & Brugiavini (2003), Kim & Klump (2008) Context
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Contribution Provide estimates of the offsetting effect of current mandatory savings on current voluntary savings Development of the Danish labour market pension system provides a direct route to assess the substitution…
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Danish labour market pension schemes Part of collective agreements between unions and employers associations Mandatory for workers in an agreement area Some uncovered parts of the labour market
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Contribution Rates for Danish Mandatory Labour Market Pensions
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Differences in implementation Which parts of the salary are liable for pension contributions? Basic salary? Always Payments by results? For some groups
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Observed contribution rates: school teachers 1998 2005
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Contribution rates
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CR for labour market pension
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Pension savers in the group of 30 to 55 years old
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Model voluntary savings mandatory labour market pension savings yearly earnings non-contractual wealth pension wealth age education interaction term
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Estimated offset effects from the full sample.
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Estimated offset effects from the sample of school and kindergarten teachers.
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Separate offset effects estimated for private pension contributions and private non-pension saving.
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Work to do… Liquidity constraints And more…
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