Social Security Pension Generosity and the Effect on Household Saving

In this paper, we examine the substitution between pension wealth and household saving. To identify the effect of reductions in social security pension wealth on household saving, we utilize variations in changes in social security pension wealth induced by Norway’s 2011 reform across different cohorts, time periods, and sectors. Our study focuses on the saving behaviors of individuals between the ages of 57 and 61, and we find that the annual saving rate increased by around 1.4 percentage points after the reform. When considering the overall life-cycle changes in household saving, this corresponds to a crowd-out effect of about 50 percent of the total loss in pension wealth.

Recommended citation: Halvorsen, E., Jia, Z., Kruse, H. and Vigtel, T.C. (2024), Social security pension and the effect on household saving. Scand. J. of Economics, 126: 529-560. https://doi.org/10.1111/sjoe.12550
Download Paper | Download Slides