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Worker and spousal responses to automatic enrollment

Author

Listed:
  • Derby, Elena
  • Mackie, Kathleen
  • Mortenson, Jacob

Abstract

This paper provides comprehensive estimates of the savings effects of automatically enrolling employees in retirement plans. We use administrative U.S. tax data to measure the retirement savings of employees (and their spouses) at 745 firms. Consistent with prior findings, we estimate that automatic enrollment increases participation in the year after hire by 86 percent and retirement plan contributions by 51 percent. However, we also find employees are 33 percent more likely to take a non-rollover withdrawal, driven by employees who separate from their employer. Incorporating this offsetting behavior, we estimate net savings increase by 37 percent on average in the short run. Spouses do not alter their saving behavior. Over a longer time-horizon, the net savings effect for employees still employed by the same firm declines for high-wage employees and increases for low-wage employees. However, the net savings effect for employees who have separated from their firm declines substantially.

Suggested Citation

  • Derby, Elena & Mackie, Kathleen & Mortenson, Jacob, 2023. "Worker and spousal responses to automatic enrollment," Journal of Public Economics, Elsevier, vol. 223(C).
    • Handle: RePEc:eee:pubeco:v:223:y:2023:i:c:s0047272723000920
    DOI: 10.1016/j.jpubeco.2023.104910
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    References listed on IDEAS

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    More about this item

    Keywords

    Retirement saving; Automatic enrollment; Nudge;
    All these keywords.

    JEL classification:

    • 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
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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