Employer matching and 401(k) savingEvidence from the health and retirement study

Employer matching and 401(k) saving

Evidence from the health and retirement study

Engelhardt

Gary V.

Engelhardt, Gary V.

Author

Kumar

Anil

Kumar, Anil

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20042004monographic

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2004

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

Employer matching of employee 401(k) contributions can provide a powerful incentive to save for retirement. We examine the effect of matching on 401(k) saving accounting for non-linearities in the intertemporal budget set. We use detailed administrative contribution, earnings, and pension plan data from the Health and Retirement Study and estimate that the elasticity of contributions with respect to matching is 0.15-0.27 overall, with sixty percent of this effect on the participation margin and the remaining forty percent on the intensive margin. The estimated after-tax cross-price elasticity of 401(k) contributions with respect to IRA saving is -0.60, which suggests 401(k)s and IRAs are substitutes in tax-deferred saving. We find no evidence of endogenous worker sorting based on the discount rate to plans that offer matching.

Gary V. Engelhardt and Anil Kumar.

CRR WP2004-18

CRR WP

2004-18

http://crr.bc.edu/images/stories/Working_Papers/wp_2004-18.pdf

MChBEnglisheng

MChB

Englisheng

English

eng