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Humboldt-Universität zu Berlin - Institut für Geschichtswissenschaften

Working Papers of the PP 1859 "Experience and Expectation"

Working Papers of the Priority Programme 1859
“Experience and Expectation. Historical Foundations of Economic Behaviour”

 

The series is published in co-operation with the documentation and publication servers of Humboldt University (https://edoc.hu-berlin.de).

 

No 1:

Lehmann-Hasemeyer, Sibylle/Streb, Jochen (2016): Does Social Security Crowd Out Private Savings? The Case of Bismarck’s System of Social Insurance. Working Papers of the Priority Programme 1859 “Experience and Expectation. Historical Foundations of Economic Behaviour” No 1 (September), Berlin

https://edoc.hu-berlin.de/docviews/abstract.php?id=42808

Imperial chancellor Bismarck’s system of social insurance (with its three pillars health, accident and pension insurance) was an important role model for social security systems across Europe and in the US. How the introduction of the German system changed economic expectations and decisions of the German workforce has not been researched, though. This article tries to close this gap by analyzing the development of Prussian savings banks’ deposits in the late 19th century. The introduction of social security can affect private savings in at least two different ways: on the one hand, it might induce households to reduce their precautionary savings; one the other hand, it might give people a reason to reflect on their financial needs at old age or when sick, thereby increasing their motivation to accumulate private savings. To identify the causal effect of social insurance on private savings in Prussia, we employ a difference-in-difference-like approach. We show that, in our example, social security crowded out private savings considerably.