Saving: A Cross-National Perspective

This chapter analyzes household saving in four European countries-Germany, Italy, the Netherlands, and the United Kingdom-and in Japan and the United States. The main focus of the "International Savings Comparison Project," which was completed under the auspices of a European Union-sponsored network of researchers, was the interaction of household saving with public policy-notably, the generosity of public pension systems. Italy has the most generous social-security system, which is essentially pay-as-you-go. It has both a very early retirement age and a rather high replacement rate. In the United Kingdom, the situation is complicated because the long string of pension reforms has generated large differences across cohorts. The need to fill income gaps after retirement with private pensions is much larger in the United States and the United Kingdom than in Italy and Germany because the United States and the United Kingdom have much lower public-pension replacement rates than Italy and Germany. Netherlands provides only a flat base pension on a pay-as-you-go basis with a replacement rate, which is very low for households above the median income.