We analysed the effect of pension wealth on household wealth holding, using Nikkei NEEDS RADAR, a survey on the financial situation of households living in the Tokyo metropolitan area.
We first estimated a wage-age equation to get permanent income, which still contains a "cohort effect" but the "aging effect" is removed. Public pension wealth of each household was then calculated according to his age and the permanent income.
Contrary to the life cycle hypothesis, we found that public pensions do not decrease household wealth.
