Working Paper: Mandatory pension savings and long-run debt accumulation: Evidence from Danish register data

Working Paper - June 2020 - No. 156

Authors Kuchler, Andreas (Danmarks Nationalbank); Andersen, Henrik Yde (Danmarks Nationalbank); Hansen, Niels Lynggård (European Stability Mechanism)
Subject household balance sheets
Type Working paper
Year 2020
Published 8 June 2020
This paper uses two decades of individual level information from Danish administrative registers to investigate the connection between pension wealth and debt accumulation. A 1-dollar increase in pension wealth leads to a 26-cent rise in total debt. Liquidity constraints seem to play a key role, and we couple the crowding-out effect with an increased propensity to use interest-only mortgages.