TY  - JOUR
AU  - Engelhardt,Gary V.
AU  - Kumar,Anil
TI  - Employer Matching and 401(k) Saving: Evidence from the Health and Retirement Study
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12447
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12447
L1  - http://www.nber.org/papers/w12447.pdf
N1  - Author contact info:
Gary V. Engelhardt
Center for Policy Research
423 Eggers Hall
Syracuse University
Syracuse, NY  13244-1020
Tel: (315) 443-3114
Fax: (315) 443-1081
E-Mail: gvengelh@maxwell.syr.edu

Anil Kumar
Federal Reserve Bank of Dallas
E-Mail: Anil.Kumar@dal.frb.org
M1  - published as Gary V. Engelhardt, Anil Kumar. "Employer matching and 401(k) saving: Evidence from the health and retirement study," in Sören Blomquist and Roger Gordon, organizers, "Trans-Atlantic Public Economics Seminar (TAPES), Public Policy and Retirement" Journal of Public Economics, Volume 91, issue 10 (Elsevier Science Publishers) (2007)

M3  - presented at "TAPES 2006", June 12-14, 2006
AB  - Employer matching of employee 401(k) contributions can provide a powerful incentive to save for retirement and is a key component in pension-plan design in the United States.  Using detailed administrative contribution, earnings, and pension-plan data from the Health and Retirement Study, this analysis formulates a life-cycle-consistent econometric specification of 401(k) saving and estimates the determinants of saving accounting for non-linearities in the household budget set induced by matching.  The participation estimates indicate that an increase in the match rate by 25 cents per dollar of employee contribution raises 401(k) participation by 3.75 to 6 percentage points, and the estimated elasticity of participation with respect to matching ranges from 0.02-0.07.  The parametric and semi-parametric estimates for saving indicate that an increase in the match rate by 25 cents per dollar of employee contribution raises 401(k) saving by $400-$700 (in 1991 dollars). The estimated elasticity of 401(k) saving to matching is also small and ranges from 0.09-0.12 overall, with just under half of this effect on the intensive margin.  Overall, the analysis reveals that matching is a rather poor policy instrument with which to raise retirement saving.
ER  -