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Social Security and Saving: New Time Series Evidence

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  • Martin Feldstein

Abstract

This paper reexamines the results of my 1974 paper on Social Security and saving with the help of an additional twenty-one years of data. The estimates presented here reconfirm that each dollar of Social Security wealth (SSW) reduces private saving by between two and three cents. The parameter estimates for the postwar period and for the entire sample since 1930 are very similar. The correction of the error in the original SSW series between 1958 and 1971 therefore does not significantly affect the original results. The estimated effect of SSW is robust with respect to the addition of a variety of variables that have been suggested in previous critiques of the original study. In the aggregate, the parameter values imply that the Social Security program currently reduces overall private saving by nearly 60 percent.

Suggested Citation

  • Martin Feldstein, 1995. "Social Security and Saving: New Time Series Evidence," NBER Working Papers 5054, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5054
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    File URL: http://www.nber.org/papers/w5054.pdf
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    References listed on IDEAS

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    1. Feldstein, Martin S, 1982. "Social Security and Private Saving: Reply," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 630-642, June.
    2. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
    3. Leimer, Dean R & Lesnoy, Selig D, 1982. "Social Security and Private Saving: New Time-Series Evidence," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 606-629, June.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Does welfare sap the will to save?
      by Peter Whiteford in Club Troppo on 2009-03-20 07:37:17

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    Cited by:

    1. Kivilcim Metin Ozcan & Asli Gunay & Seda Ertac, 2003. "Determinants of private savings behaviour in Turkey," Applied Economics, Taylor & Francis Journals, vol. 35(12), pages 1405-1416.
    2. Mariangela Bonasia & Oreste Napolitano, 2006. "The Impact of Privatisation of Pension System on National Saving: The Case of Australia and Iceland," Discussion Papers 3_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    3. Smetters, Kent, 1999. "Ricardian equivalence: long-run Leviathan," Journal of Public Economics, Elsevier, vol. 73(3), pages 395-421, September.
    4. Uhlig, Harald & Yanagawa, Noriyuki, 1996. "Increasing the capital income tax may lead to faster growth," European Economic Review, Elsevier, vol. 40(8), pages 1521-1540, November.
    5. E Philip Davis, 1996. "The Role of Institutional Investors in the Evolution of Financial Structure and Behaviour," RBA Annual Conference Volume,in: Malcom Edey (ed.), The Future of the Financial System Reserve Bank of Australia.
    6. Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
    7. World Bank, 2002. "Reducing Vulnerability and Increasing Opportunity : Social Protection in the Middle East and North Africa," World Bank Publications, The World Bank, number 14255, April.
    8. Shinichi Nishiyama & Kent Smetters, 2002. "Ricardian Equivalence with Incomplete Household Risk Sharing," NBER Working Papers 8851, National Bureau of Economic Research, Inc.
    9. Richard Disney, 2005. "Household Saving Rates and the Design of Social Security Programmes: Evidence from a Country Panel," CESifo Working Paper Series 1541, CESifo Group Munich.
    10. Karunarathne, Wasana & Abeysinghe, Tilak, 2005. "Does mandatory pension savings crowd out private savings?: The experience of Sri Lanka," Journal of Asian Economics, Elsevier, vol. 16(5), pages 830-846, October.
    11. Folster, Stefan & Henrekson, Magnus, 1999. "Growth and the public sector: a critique of the critics," European Journal of Political Economy, Elsevier, vol. 15(2), pages 337-358, June.
    12. Roman Arjona, "undated". "Gradually Capitalizing the Spanish Retirement Pension System," Studies on the Spanish Economy 81, FEDEA.
    13. E Philip Davis, 2005. "Challenges Posed by Ageing to Financial and Monetary Stability*," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(4), pages 542-564, October.
    14. MOUNA BEN OTHMAN & Mohamed Ali MAROUANI, 2016. "Labor Market Effects of Pension Reform :an overlapping genenrations general equilibrium model applied to Tunisia," EcoMod2016 9294, EcoMod.
    15. James Obben & Monique Waayer, 2011. "New Zealand's old-age pension scheme and household saving," International Journal of Social Economics, Emerald Group Publishing, vol. 38(9), pages 767-788, August.
    16. Christian Thimann & Anuradha Dayal-Gulati, 1997. "Saving in Southeast Asia and Latin America Compared; Searching for Policy Lessons," IMF Working Papers 97/110, International Monetary Fund.
    17. Jamee K. Moudud & Ajit Zacharias, 1999. "The Social Wage, Welfare Policy, and the Phases of Capital Accumulation," Economics Working Paper Archive wp_291, Levy Economics Institute.
    18. Chien-Chiang Lee & Chun-Ping Chang, 2006. "Social security expenditure and GDP in OECD countries: A cointegrated panel analysis," International Economic Journal, Taylor & Francis Journals, vol. 20(3), pages 303-320.
    19. repec:dau:papers:123456789/4094 is not listed on IDEAS
    20. E.P. Davis, 1998. "Pension Fund Reform and European Financial Markets," FMG Special Papers sp107, Financial Markets Group.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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