Economics
Giacomo Corneo, Carsten Schröder
Distributional Effects of Subsidizing Retirement Savings Accounts: Evidence from Germany
Volume 74 (2018) / Issue 4, pp. 415-445 (31)
We empirically investigate the distributional consequences of the Riester scheme, the main private pension subsidization program in Germany. We find that 38 % of the aggregate subsidy accrues to the top two deciles of the income distribution, but only 7.3 % to the bottom two. Nonetheless the Riester scheme is almost distributionally neutral in terms of standard inequality measures. Two effects offset each other: a progressive one stemming from the subsidy schedule and a regressive one due to voluntary participation. Participation is associated not only with high income but also with high household wealth.