Abstract
Precautionary demand for liquidity manifests itself as a preference for holding assets in an accessible form not because of any current liquidity need but because of a possible future need. We explore such demand by analyzing employer-sponsored retirement saving plans in France, where firms must offer medium-term investment vehicles that cannot be accessed for five years. Some also offer long-term vehicles that cannot be accessed until retirement. Plan take-up is lower when there is a long-term option; more workers opt out of the plan default when it includes one; and when hardship strikes, workers tend to withdraw long-term funds before medium-term funds.
Published Version
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