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Household Savings in Germany

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Author Info

  • Axel Börsch-Supan

    (University of Mannheim)

  • Anette Reil-Held

    (University of Mannheim)

  • Ralf Rodepeter

    (University of Mannheim)

  • Reinhold Schnabel

    (University of Mannheim)

  • University of Mannheim
  • Germany

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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File URL: http://128.118.178.162/eps/mac/papers/0004/0004053.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0004053.

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Length: 41 pages
Date of creation: 26 Oct 2000
Date of revision:
Handle: RePEc:wpa:wuwpma:0004053

Note: Type of Document - Adobe Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 41; figures: included
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Web page: http://128.118.178.162

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References

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  1. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1991. "Why is Italy's Savings Rate So High?," CEPR Discussion Papers 572, C.E.P.R. Discussion Papers.
  2. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
  3. 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.
  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 H. & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 1999. "Ersparnisbildung in Deutschland: Meßkonzepte und Ergebnisse," Munich Reprints in Economics 20239, University of Munich, Department of Economics.
  6. 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.
  7. 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.
  8. 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.
  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. 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.
  11. 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.
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Citations

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Cited by:
  1. Borsch-Supan, Axel & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 2001. "The German Savings Puzzle," Research in Economics, Elsevier, vol. 55(1), pages 15-38, March.
  2. 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.
  3. Axel Börsch-Supan & Alexander Ludwig & Mathias Sommer, 2007. "Aging and Asset Prices," MEA discussion paper series 07129, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  4. Richard Hauser & Holger Stein, 2004. "Inequality of the Distribution of Personal Wealth in Germany 1973 - 1998," Economics Working Paper Archive wp_398, Levy Economics Institute.
  5. Anette Reil Held, 2005. "Crowding out or crowding in?," MEA discussion paper series 05072, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  6. Börsch-Supan, Axel, 2004. "GLOBAL AGING - Issues, Answers, More Questions," Sonderforschungsbereich 504 Publications 07-28, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  7. Schunk, Daniel, 2007. "What Determines the Saving Behavior of German Households? An Examination of Saving Motives and Saving Decisions," Sonderforschungsbereich 504 Publications 07-10, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  8. Westerheide, Peter, 2004. "Auswirkungen von Erbschaften und Schenkungen auf die Vermögensbildung privater Personen und Haushalte: Eine ökonometrische Analyse auf der Basis des Sozio-oekonomischen Panels," ZEW Discussion Papers 04-28, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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