Are Rising Earnings Profiles a Forced-Saving Mechanism?

David Neumark

Economic Journal, 1995, vol. 105, issue 428, 95-106

Abstract: This paper tests the hypothesis that rising earnings profiles are a mechanism by which individuals engage in forced saving. It does this by examining the cross-sectional relationship between overwithholding on income tax payments--behavior that is consistent with a preference for forced saving--and the slopes of age-earnings profiles. The forced-saving hypothesis receives support from earnings regression estimates. Individuals who receive tax refunds are on earnings profiles that are significantly steeper and have significantly lower intercepts. Copyright 1995 by Royal Economic Society.

Date: 1995
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