Do Pensions Crowd-Out Other Retirement Savings?

Partially, at least according to “Crowd-Out, Education, and Employer Contributions to Workplace Pensions: Evidence from Canadian Tax Records” published in Review of Economics & Statistics by Derek Messacar (Statistics Canada). Here is the abstract:

This study assesses whether workplace pensions help individuals overcome knowledge barriers to saving for retirement. Using administrative data from Canada and exploiting unique features of the pension system, I find compelling evidence that each $1 contributed to workplace pensions partially crowds out other retirement saving by approximately $0.50—among interior savers—in a regression kink design, centering on unionized workers for methodological reasons. Further analysis indicates that active versus passive decisions are influenced by education, exploiting compulsory schooling reforms for identification. I conclude by showing that pension and education reform are both viable mechanisms for boosting saving from a life cycle perspective.

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