Sonderforschungsbereich 504 Sonderforschungsbereich 504, Email: Savings Decisions under Life-time and Earnings Uncertainty: Empirical Evidence from West German Household Data
نویسنده
چکیده
We analyze a model of life-cycle savings decisions which allows for both lifetime and income uncertainty. We then simulate life-cycle saving rates based on empirical income processes estimated from West German household data. Our main ndings are, rst, that allowing for mortality risk improves the life-cycle model's predictions slightly, and second, that simulated saving rates still fail to match their empirical counterparts. While our model correctly predicts di erential peak saving rates during working life for three household types that face di erent income processes, it cannot explain an important salient feature of saving in Germany: Empirically, there is almost no post-retirement dissaving, while our life-cycle model predicts substantial dissaving even though we control for the generous German pension system which results in relatively high post-retirement income.
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