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

Posted: 7 Apr 2005  

Daniel J. Benjamin

USC, Center for Economic and Social Research (CESR); National Bureau of Economic Research (NBER)

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. Journal of Public Economics, Vol. 87, Nos. 5-6, pp. 1259-90, 2003. Available at SSRN: https://ssrn.com/abstract=696363

Daniel J. Benjamin (Contact Author)

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

635 Downey Way
Los Angeles, CA 90089-3332
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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