Income Risk, Saving and Taxation:Will Precautionary Saving Survive?
Stefan Arent (),
Michael Kloß and
Authors registered in the RePEc Author Service: Michael Weber
No 125, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich
Former theoretical and empirical studies find that precautionary savings are reduced in the presence of social security systems. The saving motive, however, does not change: individuals respond to increasing income risk by increasing their savings. Although this still holds for common tax and transfer systems, we show that this is not a feature of all tax and transfers systems. In contrast to former studies, we focus on the impact of the variability of future income (higher degree risk).
Keywords: Income risk; saving behavior; social security; unemployment benefit; taxation (search for similar items in EconPapers)
JEL-codes: D11 D31 D91 H24 H31 (search for similar items in EconPapers)
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