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Contributory pension scheme and formal retirement savings: is there a trade-off? -evidence from India’s Atal Pension Yojna using copula regression methodology

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Abstract

This paper analyses the impact of enrollment in the recently launched contributory pension scheme, Atal Pension Yojana (APY), on formal retirement savings using a unit-level sample of households from an extensive, nationally representative survey for India. We address the endogeneity in the enrollment in APY using a novel semiparametric copula regression methodology. This methodology allows us to address and control for endogeneity due to observed and unobserved confounding, nonlinear covariate effects, and non-Gaussian distributions. Our results indicate that APY positively impacts formal retirement savings. APY crowd-in other forms of formal retirement savings. Our results suggest that marginalized populations, especially the Scheduled Tribe, are more likely to enroll in APY, and digital financial technologies can bring greater financial inclusion in India. The findings have significant policy implications on how households allocate their retirement savings and help us understand the role of APY in bringing additional savings.

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Notes

  1. Please refer to Basu et al. (2017) for a detailed discussion.

  2. See Radice et al. (2016) for a detailed description.

  3. The results are available upon request.

  4. We do not provide the non-parametric estimation results from the robustness exercise as results from these analyses are not qualitatively different from our baseline findings. They are available upon request.

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Author contributions

Contributions: D.R. was involved in conceptualizing and designing the paper. D.R. also wrote the first draft of the paper. R.S. organized the data contributed in methodology and completing the draft. Both the authors contributed to the final draft preparation.

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Authors and Affiliations

  1. Department of Economics, FLAME School of Liberal Education, FLAME University, Pune, 412115, India

    Debasis Rooj & Reshmi Sengupta

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  1. Debasis Rooj
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  2. Reshmi Sengupta
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Correspondence to Debasis Rooj.

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Rooj, D., Sengupta, R. Contributory pension scheme and formal retirement savings: is there a trade-off? -evidence from India’s Atal Pension Yojna using copula regression methodology. Rev Econ Household (2024). https://doi.org/10.1007/s11150-024-09705-w

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