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Pensions and Household Wealth Accumulation

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  • Gary V. Engelhardt
  • Anil Kumar

Abstract

Economists have long suggested that higher private pension benefits "crowd out" other sources of household wealth accumulation. We exploit detailed information on pensions and lifetime earnings for older workers in the 1992 wave of the Health and Retirement Study and employ an instrumental-variable (IV) identification strategy to estimate crowd-out. The IV estimates suggest statistically significant crowd-out: each dollar of pension wealth is associated with a 53–67 cent decline in nonpension wealth. With less precision, we use an instrumental-variable quantile regression estimator and find that most of the effect is concentrated in the upper quantiles of the wealth distribution.

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File URL: http://jhr.uwpress.org/cgi/reprint/46/1/203
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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 46 (2011)
Issue (Month): 1 ()
Pages: 203-236

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Handle: RePEc:uwp:jhriss:v:46:y:2011:i:1:p:203-236

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Web page: http://jhr.uwpress.org/

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Cited by:
  1. Hui Shan, 2008. "Property taxes and elderly mobility," Finance and Economics Discussion Series 2008-50, Board of Governors of the Federal Reserve System (U.S.).
  2. Duca, John V. & Kumar, Anil, 2014. "Financial literacy and mortgage equity withdrawals," Journal of Urban Economics, Elsevier, vol. 80(C), pages 62-75.
  3. Alessie, Rob & Angelini, Viola & van Santen, Peter, 2013. "Pension wealth and household savings in Europe: Evidence from SHARELIFE," European Economic Review, Elsevier, vol. 63(C), pages 308-328.
  4. Campbell, John Y. & Jackson, Howell E. & Madrian, Brigitte C. & Tufano, Peter, 2010. "The Regulation of Consumer Financial Products: An Introductory Essay with Four Case Studies," Working paper 631, Regulation2point0.
  5. Engelhardt, Gary V. & Kumar, Anil, 2009. "The elasticity of intertemporal substitution: New evidence from 401(k) participation," Economics Letters, Elsevier, vol. 103(1), pages 15-17, April.
  6. Burman, Leonard E. & Coe, Norma B. & Dworsky, Michael & Gale, William G., 2012. "Effects Of Public Policies On The Disposition Of Pre-Retirement Lump-Sum Distributions: Rational And Behavioral Influences," National Tax Journal, National Tax Association, vol. 65(4), pages 863-87, December.
  7. Edward N. Wolff, 2011. "Pensions in the 2000s: the Lost Decade?," NBER Working Papers 16991, National Bureau of Economic Research, Inc.
  8. Blau, David M., 2011. "Pensions, Household Saving, and Welfare: A Dynamic Analysis," IZA Discussion Papers 5554, Institute for the Study of Labor (IZA).

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