{"title":"The effect of mandated savings on private consumption: Evidence from Israel's pension reform","authors":"Roni Frish","doi":"10.1016/j.rie.2025.101038","DOIUrl":null,"url":null,"abstract":"<div><div>This study examines the impact of the Government Mandatory Pension Order (GMPO) on household consumption. The GMPO, which came into force in Israel in 2008, required contributing to a pension fund at a gradually increasing rate, up to 17.5 percent of wages in 2014 and afterwards. The study uses a diff-in-diff method to compare the development of household consumption expenditure where the household heads did not contribute to a pension fund before 2008 (“Treated”), with that of a group doing so willingly before 2008 (\"Control\"). The data sources are Israel's Central Bureau of Statistics’ annual Household Expenditure Surveys for the period 2004 through 2016 and Israel Tax Authority data on personal pension contributions. The study rejects the null hypothesis that the treatment has null effect on the consumption of the treated group in the treatment period. However, since the p-value is between 0.05–0.10 the study could not reject the null hypothesis for the conventional p-value threshold of 0.05.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"79 2","pages":"Article 101038"},"PeriodicalIF":1.2000,"publicationDate":"2025-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Research in Economics","FirstCategoryId":"1085","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1090944325000158","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This study examines the impact of the Government Mandatory Pension Order (GMPO) on household consumption. The GMPO, which came into force in Israel in 2008, required contributing to a pension fund at a gradually increasing rate, up to 17.5 percent of wages in 2014 and afterwards. The study uses a diff-in-diff method to compare the development of household consumption expenditure where the household heads did not contribute to a pension fund before 2008 (“Treated”), with that of a group doing so willingly before 2008 ("Control"). The data sources are Israel's Central Bureau of Statistics’ annual Household Expenditure Surveys for the period 2004 through 2016 and Israel Tax Authority data on personal pension contributions. The study rejects the null hypothesis that the treatment has null effect on the consumption of the treated group in the treatment period. However, since the p-value is between 0.05–0.10 the study could not reject the null hypothesis for the conventional p-value threshold of 0.05.
期刊介绍：
Established in 1947, Research in Economics is one of the oldest general-interest economics journals in the world and the main one among those based in Italy. The purpose of the journal is to select original theoretical and empirical articles that will have high impact on the debate in the social sciences; since 1947, it has published important research contributions on a wide range of topics. A summary of our editorial policy is this: the editors make a preliminary assessment of whether the results of a paper, if correct, are worth publishing. If so one of the associate editors reviews the paper: from the reviewer we expect to learn if the paper is understandable and coherent and - within reasonable bounds - the results are correct. We believe that long lags in publication and multiple demands for revision simply slow scientific progress. Our goal is to provide you a definitive answer within one month of submission. We give the editors one week to judge the overall contribution and if acceptable send your paper to an associate editor. We expect the associate editor to provide a more detailed evaluation within three weeks so that the editors can make a final decision before the month expires. In the (rare) case of a revision we allow four months and in the case of conditional acceptance we allow two months to submit the final version. In both cases we expect a cover letter explaining how you met the requirements. For conditional acceptance the editors will verify that the requirements were met. In the case of revision the original associate editor will do so. If the revision cannot be at least conditionally accepted it is rejected: there is no second revision.
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