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Household Savings Decisions in Israel’s Child Savings Program: The Role of Demographic, Financial, and Intrinsic Factors

Author

Listed:
  • Maya Haran Rosen

    (Bank of Israel)

  • Ofir Pinto

    (Israeli Employment Service)

  • Olga Kondratjeva

    (Social Policy Institute, Washington University in St. Louis)

  • Stephen Roll

    (Brown School, Washington University in St. Louis)

  • Aytakin Huseynli

    (Washington University in St. Louis)

  • Michal Grinstein-Weiss

    (Brown School, Washington University in St. Louis)

Abstract

Israel’s Child Development Account (CDA) program, the Savings for Every Child Program (SECP), is universal and automatically enrolls all children under the age of 18, depositing 51 shekels (approximately USD 14) into their accounts every month. Parents can double this savings amount and can choose an investment vehicle for their children’s deposits. The total realized benefits from the SECP depend heavily on parents’ choices. This study examines how demographic, financial, and intrinsic personality characteristics predict household participation in this program. Using a unique data set combining administrative and survey data, we find that household religion/ethnicity, parental education, and financial circumstances were the most significant predictors of household engagement with the SECP. Important differences in program enrollment and participation are observed by household religion/ethnicity. Our study informs potential policy designs of CDA programs, especially in middle- and high-income countries, and have implications for enabling less-educated and religious/ethnic minority households to save for their children’s future.

Suggested Citation

  • Maya Haran Rosen & Ofir Pinto & Olga Kondratjeva & Stephen Roll & Aytakin Huseynli & Michal Grinstein-Weiss, 2021. "Household Savings Decisions in Israel’s Child Savings Program: The Role of Demographic, Financial, and Intrinsic Factors," Journal of Family and Economic Issues, Springer, vol. 42(2), pages 368-386, June.
    • Handle: RePEc:kap:jfamec:v:42:y:2021:i:2:d:10.1007_s10834-020-09724-6
    DOI: 10.1007/s10834-020-09724-6
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