An Empirical Study of the Crowding-out Effect of the Public Pension on Private Savings by Household Characteristics(Vol.8 No.2)
This study provides good a empirical evidence of the effect of the public pension system on private savings using a saving function. Various types of household status are analyzed-the whole sample, households with a consistent balance sheet surplus, those with a consistent balance sheet deficit, those with a surplus or deficit on their balance sheets mixed for five straight years, and government employee or non-government employee households-to obtain further significant empirical evidence for the crowding-out effect. The following findings emerge from the estimation results. First, the crowding-out effect in constant surplus households is larger than in constant deficit households. Also households with a surplus or deficit mixed show a lot bigger crowding-out effect than do either of the former two cases. This means that those whose income earnings are unstable decrease their current savings and then expend them, implying that the magnitude of the crowding-out effect depends on the stability of income. Second, the crowding-out effect in households of government employees is smaller than in those of the non-government employees. In other words, income stability and early retirement incentives decrease the crowding-out effect itself. Our study implies that the effect of the public pension system on private savings may be affected by job or income security.