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Marginal Tax Rates and Tax-Favoured Pension Savings of the Self-Employed - Evidence from Sweden

By Håkan Selin

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. Using instrumental variables, I obtain a tax price elasticity estimate of –0.51 and an income elasticity estimate of 0.13, whereas OLS produces estimates that conflict with consumer theory.income taxation, fringe benefits, individual pension savings, self-employment

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