Capital Gains, Pension Funds and the Low Savings Ratio in the United States

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Capital Gains, Pension Funds and the Low Savings Ratio in the United States

Author:: Steindl, Josef

Scope:: Typoskript, 13 Blätter, mit zahlreichen Anstreichungen und Anmerkungen sowie 7 Blätter statistische Tabellen (GDP) und handschriftliche Auswertungen

Year of publication:: 1990

Source material date:: [vermutlich um 1990]

Language:: English

Description:: Reliability of statistical data, household savings as contributions to pension funds or life insurance companies.

Note:: Unveröffentlichtes Typoskript.

Related work:: Steindl, Josef: Capital Gains, Pension Funds and the Low Savings Ratio in the United States. In: Banca Nazionale del Lavoro Quarterly Review, Vol. 43, Issue 173, June 1990, S. 165-177

Topic:: Saving and distribution

JEL Classification:: E01 [Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts] E21 [Macroeconomics: Consumption, Saving, Wealth] G23 [Pension Funds, Non-bank Financial Institutions, Financial Instruments, Institutional Investors]

Shelfmark:: S/M.49.1

Access:: Free access

5 is overfunding and the provisions have been made more stringent recently (Munnel 1987).In fact the employers contributions have declined absolutely from 1981 to 1987 by almost $10 billion;since they would normally be expected to rise roughly in the same proportion as the national wage bill we should have expected the contributions to be $ 90 billion instead of 50 billion in 1987 so that they have relatively speaking declined by $40 billion. A.Munnel gives an estimate of $30 billion up to 1980 (Munnel 1987). This caused a corresponding decline in personal saving as shown by NIPA. If we add to this the spurious decline on account of the excess of benefits over investment income (see above) we get $ 60 to 75 billion which corresponds to about 2 to 2.5 per cent of disposable income.To this extent the reduction in the saving ratio is thus explained by factors which have nothing to do with the propensity to save in the accustomed sense. On the face of it you would say that the reduction in contributions has shifted saving from the household to the corporate sector. But the point is really that the whole change has been caused by the overfunding of the pension funds whose realised capital gains have been shifted to the corporation in form of reduced contributions.The question may be left open what the corporation does with it:Whether they keep it,or pay it out as dividends which partly becomes consumption,or whether they pass it on in form of reduced prices (with constant mark up,in Kaleckian fashion) which leads to increased consumption ultimately financed by the capital gains.The genuine saving is therefore considerably higher than an uncritical interpretation of the saving ratio would make it appear. The preceding analysis deals only with the financial saving of households. It is of interest to find that also the data on saving

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