Match Rates and Savings: Evidence from Individual Development Accounts
How do people respond to matched-savings incentives? Studies of 401(k) plans find that matching increases participation but that higher match rates do not increase--and may decrease--the level of savings. This paper analyzes saving by low-income people in Individual Development Accounts (IDAs), a new savings incentive that matches withdrawals if used for home purchase, post-secondary education, or self-employment. The model controls for several sources of bias common in estimates of match-rate effects: unobserved heterogeneity among firms and among participants, censoring of savings at the match cap, and an inverse relationship between match rates and match caps. In IDAs, higher match rates are associated with an increased probability of continued participation but also with a decreased level of savings.
|Date of creation:||02 Sep 2001|
|Date of revision:||27 Dec 2001|
|Note:||Type of Document - Adobe Acrobat 3.0; prepared on Windows 98; to print on Adobe Acrobat 3.0; pages: 65 ; figures: Included in pdf file|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
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.:
- Gary V. Engelhardt, 1996. "Tax Subsidies and Household Saving: Evidence from Canada," The Quarterly Journal of Economics, Oxford University Press, vol. 111(4), pages 1237-1268.
- James M. Poterba & Steven F. Venti, 1994.
"401(k) Plans and Tax-Deferred Saving,"
in: Studies in the Economics of Aging, pages 105-142
National Bureau of Economic Research, Inc.
- Poterba, J.M. & Venti, S.F. & Wise, D.A., 1992. "401(k) Plans and Tax-Deferred Savings," Working papers 92-14, Massachusetts Institute of Technology (MIT), Department of Economics.
- James M. Poterba & Steven F. Venti & David A. Wise, 1992. "401(k) Plans and Tax-Deferred Saving," NBER Working Papers 4181, National Bureau of Economic Research, Inc.
- Thaler, Richard H, 1994. "Psychology and Savings Policies," American Economic Review, American Economic Association, vol. 84(2), pages 186-92, May.
- William F. Bassett & Michael J. Fleming & Anthony P. Rodrigues, 1998.
"How workers use 401(k) plans: the participation, contribution, and withdrawal decisions,"
38, Federal Reserve Bank of New York.
- Bassett, William F. & Fleming, Michael J. & Rodrigues, Anthony P., 1998. "How Workers Use 401(k) Plans: The Participation, Contribution, and Withdrawal Decisions," National Tax Journal, National Tax Association, vol. 51(n. 2), pages 263-89, June.
- Leslie E. Papke, 1992.
"Participation in and Contributions to 401(k) Pension Plans: Evidence om Plan Data,"
NBER Working Papers
4199, National Bureau of Economic Research, Inc.
- Leslie E. Papke, 1995. "Participation in and Contributions to 401(k) Pension Plans: Evidence from Plan Data," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 311-325.
- R. Glenn Hubbard & Jonathan S. Skinner, 1996.
"Assessing the Effectiveness of Saving Incentives,"
Journal of Economic Perspectives,
American Economic Association, vol. 10(4), pages 73-90, Fall.
- Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 2009.
"The Effects Of Financial Education In The Workplace: Evidence From A Survey Of Employers,"
Western Economic Association International, vol. 47(4), pages 605-624, October.
- Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 1996. "The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers," Working Papers 96011, Stanford University, Department of Economics.
- Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 1996. "The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers," NBER Working Papers 5655, National Bureau of Economic Research, Inc.
- Bernheim, B. Douglas, 2002.
"Taxation and saving,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 18, pages 1173-1249
- William E. Even & David A. Macpherson, 2004. "Determinants and Effects of Employer Matching Contributions in 401(k) Plans," Labor and Demography 0405001, EconWPA.
- R. Glenn Hubbard & Jonathan S. Skinner, 1996. "Assessing the Effectiveness of Saving Incentives," Books, American Enterprise Institute, number 53540, February.
- Eric M. Engen & William G. Gale, 2000. "The Effects of 401(k) Plans on Household Wealth: Differences Across Earnings Groups," NBER Working Papers 8032, National Bureau of Economic Research, Inc.
- Shlomo Maital, 1986. "Prometheus Rebound: On Welfare-Improving Constraints," Eastern Economic Journal, Eastern Economic Association, vol. 12(3), pages 337-344, Jul-Sep.
- Moffitt, Robert, 1990. "The Econometrics of Kinked Budget Constraints," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 119-39, Spring.
- Beverly, Sondra G. & Sherraden, Michael, 1999. "Institutional determinants of saving: implications for low-income households and public policy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 28(4), pages 457-473.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpmi:0108003. 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: (EconWPA)
If references are entirely missing, you can add them using this form.