Voluntary pension savings: the effects of the finnish tax reform on savers’ behaviour
AbstractMany countries tax voluntary pension savings using the so-called EET model, based on tax-deductible savings and taxable withdrawals. In Finland the tax reform of 2005 changed the tax rate schedule from progressive to proportional, while the basic structure of the EET model was retained. This paper studies empirically the savers’ behavioural changes as a result of the reform using individual level data. The econometric estimations indicate that the reform altered pension saving behaviour by reducing the labour income and age effects on saving contributions in a statistically significant way. Also, the reform reduced the number of pension savers among high income-earners.
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Bibliographic InfoPaper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2009/22.
Length: 29 pages
Date of creation: 2009
Date of revision:
voluntary pension savings; tax reform; tax incentives;
Other versions of this item:
- Jarkko Harju, 2009. "Voluntary pension savings: the effects of the Finnish tax reform on savers' behaviour," Working Papers 7, Government Institute for Economic Research Finland (VATT).
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models
This paper has been announced in the following NEP Reports:
- NEP-AGE-2009-11-14 (Economics of Ageing)
- NEP-ALL-2009-11-14 (All new papers)
- NEP-PUB-2009-11-14 (Public Finance)
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