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Does mandatory retirement saving crowd out voluntary retirement saving?

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  • Friedberg, Leora
  • Leive, Adam
  • Cai, Wenqiang

Abstract

We use administrative data from a large public university to study employee responses to mandatory retirement saving, which represent a policy alternative to nudges. In response to a substantial increase in mandatory saving, we observe full crowd-out of voluntary saving for a subset of low-contributing low earners and high-contributing high earners, but otherwise little crowd-out for most employees. On average, only 30 percent of the mandatory contributions are offset by lower voluntary contributions. Our results suggest that mandatory retirement saving is likely to increase total retirement saving.

Suggested Citation

  • Friedberg, Leora & Leive, Adam & Cai, Wenqiang, 2024. "Does mandatory retirement saving crowd out voluntary retirement saving?," Journal of Economic Behavior & Organization, Elsevier, vol. 225(C), pages 20-36.
    • Handle: RePEc:eee:jeborg:v:225:y:2024:i:c:p:20-36
    DOI: 10.1016/j.jebo.2024.06.024
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    More about this item

    Keywords

    Retirement saving; Crowd-out; Household Behavior; Pensions; Passive saving;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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