Does 401(K) Eligibility Increase Saving? Evidence from Propensity Score Subclassification

Posted: 7 Apr 2005

See all articles by Daniel J. Benjamin

Daniel J. Benjamin

Anderson School of Management; USC, Center for Economic and Social Research (CESR); National Bureau of Economic Research (NBER); Human Genetics Department, David Geffen School of Medicine

Abstract

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

Suggested Citation

Benjamin, Daniel J., Does 401(K) Eligibility Increase Saving? Evidence from Propensity Score Subclassification. Available at SSRN: https://ssrn.com/abstract=696363

Daniel J. Benjamin (Contact Author)

Anderson School of Management ( email )

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USC, Center for Economic and Social Research (CESR) ( email )

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National Bureau of Economic Research (NBER) ( email )

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Human Genetics Department, David Geffen School of Medicine ( email )

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