Abstract
Using Japanese annual time series data covering the period 1950–1982, our study shows that social security wealth during this period depressed personal savings. As a result, there was a reduction of approximately 79000 yen of wealth per capitain real terms from 1960 to 1980. However, the declining labour force participation of elderly males, (brought about, for example, by earlier retirement), stimulated personal savings by an estimated 13000 yen over the same period. The results indicate that the benefit effect tends to outweigh the retirement effect. Furthermore, this study has identified a negative interdependency between the level of personal savings and the retirement behaviour of elderly males. A typical male worker saves more before retirement if that individual expects to stay a shorter time in the labour market. Retirement behaviour is less responsive to a change in personal savings behaviour than vice versa
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