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Voluntary Pension Savings and Tax Incentives: Evidence from Finland

  • Jarkko Harju

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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Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 69 (2013)
Issue (Month): 1 (March)
Pages: 3-29

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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201303)69:1_3:vpsati_2.0.tx_2-5
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  1. Richard Disney & Carl Emmerson & Matthew Wakefield, 2010. "Tax Reform and Retirement Saving Incentives: Take-up of Stakeholder Pensions in the UK," Economica, London School of Economics and Political Science, vol. 77(306), pages 213-233, 04.
  2. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2004. "Evaluating the Employment Impact of a Mandatory Job Search Program," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 569-606, 06.
  3. 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.
  4. Woojin Chung & Richard Disney & Carl Emmerson & Matthew Wakefield, . "Public policy and retirement saving incentives in the UK," Discussion Papers 06/03, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  5. Hans Fehr & Christian Habermann & Fabian Kindermann, 2008. "Tax-Favored Retirement Accounts: Are they Efficient in Increasing Savings and Growth?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(2), pages 171-198, June.
  6. Victor Chernozhukov & Christian Hansen, 2004. "The Effects of 401(K) Participation on the Wealth Distribution: An Instrumental Quantile Regression Analysis," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 735-751, August.
  7. Orazio P. Attanasio & Thomas DeLeire, 2002. "The Effect Of Individual Retirement Accounts On Household Consumption And National Saving," Economic Journal, Royal Economic Society, vol. 112(6), pages 504-538, July.
  8. Ilja Kristian Kavonius, 2010. "Fiscal policies in Europe and the United States during the Great Depression," Working Papers 13, Government Institute for Economic Research Finland (VATT).
  9. Annamaria Lusardi, 2008. "Household Saving Behavior: The Role of Financial Literacy, Information, and Financial Education Programs," NBER Working Papers 13824, National Bureau of Economic Research, Inc.
  10. Eric M. Engen & William G. Gale & John Karl Scholz, 1994. "Do Saving Incentives Work?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 85-180.
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