Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272868 
Year of Publication: 
2022
Series/Report no.: 
Sveriges Riksbank Working Paper Series No. 411
Publisher: 
Sveriges Riksbank, Stockholm
Abstract: 
A growing literature explores reasons for rising wealth inequality, but disregards the role of pension systems despite their well-understood infiuence on life-cycle saving. In theory and according to available evidence, both pay-as-you-go (PAYG) and fully-funded (FF) pension schemes crowd out voluntary retirement saving. They differ because aggregate savings decrease in the former but increase under the latter system. Unlike most nations, Denmark has seen a decline in wealth inequality in recent decades. This paper studies a calibrated life-cycle model of Denmark and employs unique registry data to argue that a Danish pension system transition, from a mostly PAYG to a dominant, mandated FF scheme, explains much of this decline.
Subjects: 
Wealth inequality
pension systems
crowding out
life-cycle savings
JEL: 
D31
E01
E21
H55
G51
J32
Document Type: 
Working Paper

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