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Pensions and Household Wealth Accumulation

  • Gary V. Engelhardt
  • Anil Kumar

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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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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  1. Martin Browning & Annamaria Lusardi, 1995. "Household Saving: Micro Theories and Micro Facts," Department of Economics Working Papers 1995-02, McMaster University.
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