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Social security and household saving in Korea : Evidence from the household income and expenditure survey

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  • Social security and household saving in Korea
  • Choi, Seng-Eun
  • The Korean Economic Association


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Title Social security and household saving in Korea
Similar Titles
Sub Title

Evidence from the household income and expenditure survey

Material Type Reports
Author(English)

Choi, Seng-Eun

Publisher

[Seoul]:The Korean Economic Association

Date 2010
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < General
Social Development < Social Welfare
Holding The Korean Economic Association

Abstract

Using a quasi-experimental approach, the paper examines how the introduction of a social security system in Korea affects household saving. The relatively short history of social security in Korea provides an exogenous source of variations both in time-series and cross-section. For time-series variation, periods 1983 to 1987 and 1989 to 1991 are used in various combinations. For cross-sectional variation, government employees with special pension plan are used as control group. The paper finds that a social security system crowds out household saving. Estimates show that the effect of Korea’s national pension on household saving ranges from -0.9 to - 1.8 percentage points, and -1.4 percentage points on average. When the group-specific time trend is considered, the crowding-out effect is estimated as -3.4 percentage points to -9.3 percentage points, and -5.9 percentage points on average. The crowding-out effect might get larger as a social security system matures.