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Voluntary Pension Savings and Tax Incentives: Evidence from Finland

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  • Jarkko Harju

Abstract

This paper studies empirically savers' behavioral responses to the Finnish tax reform of 2005 by using comprehensive panel data. The tax schedule of voluntary pension savings changed from progressive to proportional, changing the saving incentives in different subgroups. The results indicate that the reform altered saving behavior by reducing voluntary pension saving coverage among high income earners by 4 percentage points and increasing it among low income earners by 2 percentage points. The reform also reduced annual saving contributions among high income earners by over 20%. The estimated effects result entirely from the changed saving behavior of men.

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  • Jarkko Harju, 2013. "Voluntary Pension Savings and Tax Incentives: Evidence from Finland," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 69(1), pages 3-29, March.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201303)69:1_3:vpsati_2.0.tx_2-5
    DOI: 10.1628/001522108X663451
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    Cited by:

    1. Hokkanen, Joni & Kangasharju, Aki & Linnosmaa, Ismo & Valtonen, Hannu, 2012. "Generic substitution policy, prices and market structure: evidence from a quasi-experiment in Finland," Working Papers 35, VATT Institute for Economic Research.

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    More about this item

    Keywords

    voluntary pension savings; tax reform; tax incentives;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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