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Does Social Security Crowd Out Private Savings? The Case of Bismarck’s System of Social Insurance
[Pension Wealth and Household Savings in Europe: Evidence from SHARELIFE]

Author

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  • Sibylle Lehmann-Hasemeyer
  • Jochen Streb

Abstract

Imperial chancellor Bismarck’s system of social insurance (with its three pillars health, accident and pension insurance) was an important role model for social security systems across Europe and in the USA. How the introduction of the German system changed economic expectations and decisions of the German workforce has not been researched, though. This article closes this gap by analyzing the development of Prussian savings banks’ deposits in the late 19th century with the help of a difference-in-difference-like approach. We show that, in the Prussian case, social security crowded out private savings considerably. As counterfactual voluntary savings would have been far from sufficient, however, Bismarck’s social insurance system might still have been needed to fight the misery workers and their families potentially faced in old age or times of sickness.

Suggested Citation

  • Sibylle Lehmann-Hasemeyer & Jochen Streb, 2018. "Does Social Security Crowd Out Private Savings? The Case of Bismarck’s System of Social Insurance [Pension Wealth and Household Savings in Europe: Evidence from SHARELIFE]," European Review of Economic History, European Historical Economics Society, vol. 22(3), pages 298-321.
    • Handle: RePEc:oup:ereveh:v:22:y:2018:i:3:p:298-321.
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    File URL: http://hdl.handle.net/10.1093/ereh/hex022
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    Citations

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    Cited by:

    1. Timothy W. Guinnane & Jochen Streb, 2021. "The Introduction of Bismarck's Social Security System and its Effects on Marriage and Fertility in Prussia," Population and Development Review, The Population Council, Inc., vol. 47(3), pages 749-780, September.
    2. Guinnane, Timothy & Streb, Jochen, 2019. "Bismarck to no Effect: Fertility Decline and the Introduction of Social Insurance in Prussia," Working Papers 13, German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin.
    3. Marcin Wroński, 2023. "The Displacement Effects of Social Security Wealth in a Transition Economy: The Case of Poland," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 19-40.
    4. Lehmann-Hasemeyer, Sibylle & Prettner, Klaus & Tscheuschner, Paul, 2023. "The scientific revolution and its implications for long-run economic development," World Development, Elsevier, vol. 168(C).
    5. Felix Kersting, 2022. "Welfare Reform and Repression in an Autocracy: Bismarck and the Socialists," Working Papers 0227, European Historical Economics Society (EHES).
    6. Ngoc Dao, 2024. "Does a requirement to offer retirement plans help low‐income workers save for retirement? Early evidence from the OregonSaves program," Contemporary Economic Policy, Western Economic Association International, vol. 42(3), pages 524-543, July.
    7. Marcin Wron ski, 2023. "Does Social Security Crowd out Private Wealth? A Survey of the Literature," Journal of Economic Analysis, Anser Press, vol. 2(4), pages 98-122, July.
    8. Timothy W. Guinnane & Tobias A. Jopp & Jochen Streb, 2021. "Bismarcks Sozialversicherung und ihr Einfluss auf Deutschlands demografischen Wandel," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(4), pages 262-265, April.
    9. Felix Kersting, 2023. "Mimicking the Opposition: Bismarck's Welfare State and the Rise of the Socialists," Rationality and Competition Discussion Paper Series 448, CRC TRR 190 Rationality and Competition.

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