Does 401(k) Eligibility Increase Saving? Evidence from Propensity Score Subclassification
Daniel J. Benjamin
USC, Center for Economic and Social Research (CESR); National Bureau of Economic Research (NBER)
Journal of Public Economics, Vol. 87, Nos. 5-6, pp. 1259-90, 2003
By comparing 401(k) eligible and ineligible households' wealth, this paper estimates that, on average, about one half of 401(k) balances represent new private savings, and about one quarter of 401(k) balances represent new national savings. Responses to eligibility vary considerably, however, with households who normally save the most largely contributing funds they would have saved anyway. This paper improves on previous research by (1) employing propensity score subclassification to control more completely for observed household characteristics, (2) controlling for more household characteristics, including several correlated with unobserved savings preferences, and (3) adjusting the observed measure of households' wealth to reduce measurement error.
Keywords: Saving, Retirement, Propensity score
JEL Classification: H2, H31, C21
Date posted: April 7, 2005
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