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Social Security and Household Saving in Korea: Evidence from the Household Income and Expenditure Survey

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  • Seng-Eun Choi

    (Korea Institute for Health and Social Affairs)

Abstract

Using a quasi-experimental approach, the paper examines how the introduction of a social security system in Korea affects household saving. The relatively short history of social security in Korea provides an exogenous source of variations both in time-series and cross-section. For time-series variation, periods 1983 to 1987 and 1989 to 1991 are used in various combinations. For cross-sectional variation, government employees with special pension plan are used as control group. The paper finds that a social security system crowds out household saving. Estimates show that the effect of Korea��s national pension on household saving ranges from -0.9 to -1.8 percentage points, and -1.4 percentage points on average. When the group-specific time trend is considered, the crowding-out effect is estimated as -3.4 percentage points to -9.3 percentage points, and -5.9 percentage points on average. The crowding-out effect might get larger as a social security system matures.

Suggested Citation

  • Seng-Eun Choi, 2010. "Social Security and Household Saving in Korea: Evidence from the Household Income and Expenditure Survey," Korean Economic Review, Korean Economic Association, vol. 26, pages 97-119.
    • Handle: RePEc:kea:keappr:ker-20100630-26-1-05
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    References listed on IDEAS

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    More about this item

    Keywords

    Social security; Household saving; Crowding-out; Quasiexperiment;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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