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Household Savings in Germany

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  • Axel Borsch-Supan
  • Anette Reil-Held
  • Ralf Rodepeter
  • Reinhold Schnabel
  • Joachim Winter

Abstract

This paper describes how German households save and how their saving behavior is linked to public policy, notably pension policy. The analysis is based on a synthetic panel of four cross sections of the German Income and Expenditure Survey ("Einkommens- und Verbrauchsstichproben," EVS,1978, 1983, 1988, and 1993). The paper carefully distinguishes between several saving measures and concepts. It separates discretionary savings from mandatory savings and uses two flow measures: first, the sum of purchases of assets minus the sum of sales of assets and, second, the residual of income minus consumption. Our main finding is a hump-shaped age-saving profile with a high overall saving rate. However, savings remain positive in old age, even for most low-income households. How can we explain what may be termed the "German savings puzzle"? Germany has one of the most generous public pension and health insurance systems in the world, yet private savings are high until old age. We provide a complicated answer that combines historical facts with capital market imperfections and a distinction between the role of discretionary and mandatory savings.

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Bibliographic Info

Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_306.

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Date of creation: Jul 2000
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Handle: RePEc:lev:wrkpap:wp_306

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References

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  1. Walliser, Jan & Winter, Joachim, 1998. "Tax incentives, bequest motives and the demand for life insurance: evidence from Germany," Sonderforschungsbereich 504 Publications 99-28, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  2. Börsch-Supan, Axel & Reil-Held, Anette & Schnabel, Reinhold, 1998. "Pension Provision in Germany," Sonderforschungsbereich 504 Publications 98-07, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  3. Rodepeter, Ralf & Winter, Joachim, 1998. "Savings decisions under life-time and earnings uncertainty:," Sonderforschungsbereich 504 Publications 98-58, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  4. Fachinger, Uwe, 1998. "Die Verteilung der Vermögen privater Haushalte: Einige konzeptionelle Anmerkungen sowie empirische Befunde für die Bundesrepublik Deutschland," Working papers of the ZeS 13/1998, University of Bremen, Centre for Social Policy Research (ZeS).
  5. Börsch-Supan, Axel & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 1999. "Ersparnisbildung in Deutschland: Meßkonzepte und Ergebnisse auf Basis der EVS," Sonderforschungsbereich 504 Publications 99-02, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  6. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
  7. James Poterba, 1994. "International Comparisons of Household Saving," NBER Books, National Bureau of Economic Research, Inc, number pote94-1, July.
  8. James M. Poterba, 1994. "Introduction to "International Comparisons of Household Saving"," NBER Chapters, in: International Comparisons of Household Saving, pages 1-10 National Bureau of Economic Research, Inc.
  9. Borsch-Supan, Axel, 1992. "Saving and Consumption Patterns of the Elderly: The German Case," Journal of Population Economics, Springer, vol. 5(4), pages 289-303.
  10. Anette Reil-Held, 1999. "Bequests and Aggregate Wealth Accumulation in Germany," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 24(1), pages 50-63, January.
  11. Reinhard Hujer & Bernd Fitzenberger & Reinhold Schnabel & Thomas E. MaCurdy, 2001. "Testing for uniform wage trends in West-Germany: A cohort analysis using quantile regressions for censored data," Empirical Economics, Springer, vol. 26(1), pages 41-86.
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Cited by:
  1. Weller, Christian E., 2001. "Programs without alternative: Public pensions in the OECD," ZEI Working Papers B 15-2001, ZEI - Center for European Integration Studies, University of Bonn.

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