Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2009:6: Marginal tax rates and tax-favoured pension savings of the self-employed Evidence from Sweden

Håkan Selin ()
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Håkan Selin: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

Abstract: In recent years, the study of how individuals respond to policies that aim at promoting pension savings has emerged as a vital area of economic research. This paper adds to this literature by estimating the tax price elasticity of contributions to tax-favoured pension savings accounts on a population of self-employed individuals. I exploit a unique total data base over the Swedish population that covers the years 1999 to 2005. When using instrumental variables I obtain a tax price elasticity estimate of -0.53 and a virtual income elasticity estimate of 0.11, whereas OLS produces estimates that conflict with consumer theory.

Keywords: Income taxation; fringe benefits; individual pension savings; self-employment

JEL-codes: G23; H24; J26; J33

32 pages, May 8, 2009

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