Pension Wealth and Household Saving in Europe : Evidence from SHARELIFE

We use recently collected retrospective survey data to estimate the displacement effect of pension wealth on household savings. The third wave of the Survey of Health, Ageing and Retirement in Europe, SHARELIFE, collects information on the entire job history of the respondent, a feature missing in most previous studies that estimate the displacement effect. We show the ability of the retrospective survey to generate cross-country differences in wages and pensions which are in line with expectations. The displacement effect is estimated to be equal to 47.1% using robust regression, and 60.9% using median regression techniques, and significantly different from zero and 100%. In the presence of biases from measurement errors and omitted (unobserved) variables, we estimate a lower bound to the true offset between 17% and 30%, significantly different from zero. Instrumental variables regression estimates, although less precise, suggest full displacement