Choosing between subsidized or unsubsidized private pension schemes: a random parameters bivariate probit analysis
In 2002, the German government tried to increase private old-age provisions by introducing incentives such as supplementary subsidies and tax credits. Since then, the so-called “Riester pension” has grown in popularity. Apart from subsidized pension plans, unsubsidized private pension insurances as an instrument for old-age have been enormously important for a long time. With data for the years 2005 to 2009 from the German SAVE study, we analyze whether the decision for a “Riester pension” is independent of the decision for unsubsidized private pension insurance using methods for simultaneous equations. Our estimation results indicate that decisions on “Riester” and private pensions are not independent and the proposed random-parameters bivariate probit model results in efficiency gains compared to single probit estimations. Regarding governmental subsidies, we find positive incentive effects of child subsidies whereas low income earners are not induced to increase their old-age provisions. Further, there is strong evidence for a “crowding-in” among alternative assets as well as a significant effect of demand inducement. Finally, considering the saving motives, individuals do not take a “Riester pension” because of securing pension payments only but to pick up granted subsidies.
|Date of creation:||07 Mar 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Axel Börsch-Supan & Anette Reil-Held & Daniel Schunk, 2007. "The savings behaviour of German households: First Experiences with state promoted private pensions," MEA discussion paper series 07136, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Schulte, Katharina & Zirpel, Ulrike, 2010. "Betting on a long life: The role of subjective life expectancy in the demand for private pension insurance of german households," Economics Working Papers 2010,06, Christian-Albrechts-University of Kiel, Department of Economics.
- Coppola, Michela & Reil-Held, Anette, 2009. "Dynamik der Riester-Rente: Ergebnisse aus SAVE 2003 bis 2008," MEA discussion paper series 09195, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Johannes Geyer & Viktor Steiner, 2009. "Zahl der Riester-Renten steigt sprunghaft: aber Geringverdiener halten sich noch zurück," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 76(32), pages 534-541.
- William Greene, 2001.
"Fixed and Random Effects in Nonlinear Models,"
01-01, New York University, Leonard N. Stern School of Business, Department of Economics.
- Greene, W., 2001. "Fixed and Random Effects in Nonlinear Models," New York University, Leonard N. Stern School Finance Department Working Paper Seires 01-01, New York University, Leonard N. Stern School of Business-.
- Giacomo Corneo & Matthias Keese & Carsten Schröder, 2010.
"The Eff ect of Saving Subsidies on Household Saving – Evidence from Germanys,"
Ruhr Economic Papers
0170, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Corneo, Giacomo & Keese, Matthias & Schröder, Carsten, 2010. "The effect of saving subsidies on household saving: Evidence from Germany," Discussion Papers 2010/3, Free University Berlin, School of Business & Economics.
- Christian Pfarr & Udo Schneider, 2011. "Anreizeffekte und Angebotsinduzierung im Rahmen der Riester‐Rente: Eine empirische Analyse geschlechts‐ und sozialisationsbedingter Unterschiede," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(1), pages 27-46, 02.
- Börsch-Supan, Axel & Reil-Held, Anette & Schunk, Daniel, 2008. "Saving incentives, old-age provision and displacement effects: evidence from the recent German pension reform," Journal of Pension Economics and Finance, Cambridge University Press, vol. 7(03), pages 295-319, November.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:29400. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.