Harvard Kennedy School Harvard University

Search this site

Brigitte Madrian
Aetna Professor of Public Policy and Corporate Management
phone: (617)495-8917
fax: (617)496-1722
Academic Journal/Scholarly Articles
Beshears, John, James J. Choi, Joshua Hurwitz, David Laibson, and Brigitte C. Madrian. "Liquidity in Retirement Savings Systems: An International Comparison." American Economic Review Papers and Proceedings 105.5 (May 2015): 420-425.
We compare the liquidity that six developed countries have built into their employer-based defined contribution (DC) retirement schemes. In Germany, Singapore, and the UK, withdrawals are essentially banned no matter what kind of transitory income shock the household realizes. By contrast, in Canada and Australia, liquidity is state-contingent. For a middle-income household, DC accounts are completely illiquid unless annual income falls substantially, in which case DC assets become highly liquid. The US stands alone in the universally high liquidity of its DC system: whether or not income falls, the penalties for early withdrawal are low or non-existent.




Copyright © 2017 The President and Fellows of Harvard College