Effectiveness of tax incentives to boost (retirement) saving:theoretical motivation and empirical evidence
AbstractThe adequacy of household saving for retirement has become a policy issue all around the world. The UK andUS have been in the vanguard of those countries that have tried to encourage retirement saving by providingtax-favoured treatment for particular savings accounts. We consider empirical evidence from these twocountries regarding the extent to which funds in some specific tax advantaged accounts (IRAs in the US,TESSAs and ISAs in the UK) represent new savings. Our best interpretation of this evidence is that: onlyrelatively small fractions of these funds can be considered to be ?new? saving and so these policies have been anexpensive means of encouraging saving; there has been some deadweight loss from the policies associated with?reshuffling? of existing savings. Continuing improvements in data on individual financial behaviour createscope for future empirical analysis of incentives to save, both within the standard economic framework that weexplain and exploit, and by considering extensions to and adaptations of it.
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Date of creation: Dec 2004
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Other versions of this item:
- Orazio Attanasio & James Banks & Matthew Wakefield, 2004. "Effectiveness of tax incentives to boost (retirement) saving: theoretical motivation and empirical evidence," IFS Working Papers W04/33, Institute for Fiscal Studies.
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- H39 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Other
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