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Distributional Effects of Subsidizing Retirement Savings Accounts: Evidence from Germany

Diskussionspapiere extern

Giacomo Corneo, Carsten Schröder, Johannes König

Berlin: Freie Univ. Berlin, FB Wirtschaftswiss., 2015, 34 S.
(Discussion Paper / School of Business & Economics ; 2015,18)

Abstract

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 population, but only 7.3% to the bottom two. Nonetheless the Riester scheme is almost distributionally neutral when looking at standard inequality measures. This is due to two offsetting effects: a progressive one stemming from the subsidy schedule and a regressive one from voluntary participation. Regressions of the participation decision suggest that a high level of household wealth significantly increases the probability of benefiting from the Riester scheme.

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: saving subsidies, retirement plans, income distribution
Externer Link:
http://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000022677

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