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Is Pension Reform Conducive to Higher Saving?

Andrew A. Samwick
The Review of Economics and Statistics
Vol. 82, No. 2 (May, 2000), pp. 264-272
Published by: The MIT Press
Stable URL: http://www.jstor.org/stable/2646819
Page Count: 9
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Is Pension Reform Conducive to Higher Saving?
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Abstract

Declining fertility, mortality, and productivity rates in developed countries and the popularity of the social security privatization in Chile as a pathway to financial development have sparked a global interest in social security reform. This paper analyzes the effect of social security on saving using a panel of countries over 25 years. Variation in the characteristics of social security systems is used to determine whether less reliance on a pay-as-you-go, unfunded system is associated with higher national saving. There is little evidence that countries that implement defined-contribution reforms have higher trends in saving rates after the reform. Cross-sectionally, countries with pay-as-you-go systems tend to have lower saving rates, and this effect increases with the coverage rate on the system.

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