The Impact of Compulsory Saving Schemes on Saving Behavior: Evidence from Thailand
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Abstract
Thailand has many compulsory saving schemes for longevity and income uncertainty at old age. A crucial question is whether how saving schemes affect saving behavior. The Blinder-Oaxaca decomposition method shows that compulsory saving systems induce formal workers to save more than informal workers. Because compulsory saving is one of the saving channels that offers a high return to savings and provides the other social welfares that reduce the cost of living. However, low-income informal workers have a higher saving incentive to compensate for the lack of compulsory savings. Moreover, the difference in the compulsory saving schemes between government employees and private employees induce private employees to save more than government employees.
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