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Distributional Effects of Subsidizing Retirement Savings Accounts: Evidence from Germany

Referierte Aufsätze Web of Science

Giacomo Corneo, Johannes König, Carsten Schröder

In: Finanzarchiv 74 (2018) 4, S. 415-445


We empirically investigate the distributional consequences of the Riester scheme, the main private pension subsidization program in Germany. We find that 38% of the aggregate subsidy accrues to the top two deciles of the income distribution, but only 7.3% to the bottom two. Nonetheless the Riester scheme is almost distributionally neutral in terms of standard inequality measures. Two effects offset each other: a progressive one stemming from the subsidy schedule and a regressive one due to voluntary participation. Participation is associated not only with high income but also with high household wealth.

Johannes König

Research Associate in the German Socio-Economic Panel study Department

Carsten Schröder

Board of Directors SOEP and Division Head Applied Panel Analysis in the German Socio-Economic Panel study Department

JEL-Classification: D31;H55;J32;D14;I38
Keywords: Income distribution, retirement plans, saving subsidies