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Personal Retirement Accounts and Saving

Author

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  • Emma Aguila

Abstract

Many countries are including personal retirement accounts (PRAs) as part of their social security systems. PRA systems boost private savings at the macro level by converting a government financial liability into private wealth. At the micro level, however, crowing-out effects on household savings could be offsetting some of this increase in private savings and may lead to inadequate preparedness for retirement. The author tests this hypothesis by using the Mexican social security reform of 1997 as a natural experiment, because only part of that system was changed from pay-as-you-go to PRAs. She finds that social security reform with PRAs does indeed crowd out household savings and recommends strengthening voluntary savings for retirement along with social security reform.

Suggested Citation

  • Emma Aguila, 2008. "Personal Retirement Accounts and Saving," Working Papers WR-600, RAND Corporation.
    • Handle: RePEc:ran:wpaper:wr-600
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    More about this item

    Keywords

    Social security reform; household saving; public policy evaluation;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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