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The Impacts of Matching Contributions on Retirement Savings: Evidence from a Quasi-Natural Experiment in Turkey

Author

Listed:
  • Sadettin Haluk Citci

    (Department of Economics, Gebze Technical University)

  • Halit Yanikkaya

    (Department of Economics, Gebze Technical University)

Abstract

Using a dataset containing information for more than 39 million contracts and a quasi-experimental design provided by national matching contribution policy reform in Turkey, we study the effects of matching contributions on saving outcomes and determine heterogeneities in responses to matching contribution. Differences-in-differences estimations show that the program leads to a substantial rise in contributions paid. The matching contribution policy raises contributions paid by 18 percent. Moreover, after 30 percent sharp rise in the match threshold, we examine the effect of the upsurge in threshold on the contributions paid. Overall, our results imply that the match threshold is binding and financial incentives significantly raise saving contributions.

Suggested Citation

  • Sadettin Haluk Citci & Halit Yanikkaya, 2023. "The Impacts of Matching Contributions on Retirement Savings: Evidence from a Quasi-Natural Experiment in Turkey," Working Papers 2022-02, Gebze Technical University, Department of Economics.
    • Handle: RePEc:geb:wpaper:2022-02
    as

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    References listed on IDEAS

    as
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    3. Esther Duflo & William Gale & Jeffrey Liebman & Peter Orszag & Emmanuel Saez, 2007. "Savings Incentives for Low- and Moderate-Income Families in the United States: Why is the Saver's Credit Not More Effective?," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 647-661, 04-05.
    4. Raj Chetty & John N. Friedman & Søren Leth-Petersen & Torben Heien Nielsen & Tore Olsen, 2014. "Active vs. Passive Decisions and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1141-1219.
    5. Mitchell, Olivia S. & Utkus, Stephen P. & Yang, Tongxuan (Stella), 2007. "Turning Workers Into Savers? Incentives, Liquidity, and Choice in 401(K) Plan Design," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(3), pages 469-489, September.
    6. Engelhardt, Gary V. & Kumar, Anil, 2007. "Employer matching and 401(k) saving: Evidence from the health and retirement study," Journal of Public Economics, Elsevier, vol. 91(10), pages 1920-1943, November.
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    8. James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2002. "Defined Contribution Pensions: Plan Rules, Participant Choices, and the Path of Least Resistance," NBER Chapters, in: Tax Policy and the Economy, Volume 16, pages 67-114, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    saving incentives; matching contributions; pension saving;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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