TY  - JOUR
AU  - Kaplow,Louis
TI  - Targeted Savings and Labor Supply
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15656
PY  - 2010
Y2  - January 2010
UR  - http://www.nber.org/papers/w15656
L1  - http://www.nber.org/papers/w15656.pdf
N1  - Author contact info:
Louis Kaplow
Harvard University
Hauser 322
Cambridge, MA  02138
Tel: 617/495-4101
Fax: 617/496-4880
E-Mail: meskridge@law.harvard.edu
AB  - Substantial evidence suggests that savings behavior may depart from neoclassical optimization.  This article examines the implications of raising the savings rate – whether through social security, retirement plans, or otherwise – for labor supply, where labor supply is determined by behavioral utility functions that reflect the non-neoclassical character of savings behavior.  Under one formulation, raising the targeted savings rate has the same effect on labor supply as that of raising the labor income tax rate; under a second, raising the targeted savings rate has no effect on labor supply; and under a third, raising the targeted savings rate increases labor supply regardless of the slope of the labor supply curve.  Effects on labor supply are particularly consequential because of the significant preexisting distortion due to labor income taxation.
ER  -