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KMID : 1124020130290030053
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Korean Social Security Studies
2013 Volume.29 No. 3 p.53 ~ p.79
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The Causal Effects of Tax Incentive on Pension Saving of Korean Households
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Kim Byeong-Kwon
Woo Seok-Jin
An Jong-Kil
Bhin Ki-Beom
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Abstract
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This paper examines the effect of tax incentive for pension saving, revised in 2006, on the saving decisions of Korean households. In order to measure the causal effect of the tax incentive, we constructed the treatment group and the control group based upon their pension saving contribution in 2005. And we compared the households which contributed 3.0 million won or less in 2005 and the ones which contributed more than 3.0 million won in 2005. The former had an incentive to increase their pension saving to gain more tax benefit due to the tax reform in 2006 while the latter did not have one. Using the KLIPS, first, we estimated whether the tax change had increased the amount of pension saving. Second, we tested whether the family saving was crowded out by the retirement saving. The estimation results show that the tax change for pension saving increased the pension saving of the families with tax incentives to a statistically significant margin. On the other hand, the estimated relationship between the pension saving and total saving of the treatment group shows that their other savings are considerably crowded out by the pension saving.
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KEYWORD
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pension saving, treatment effect, tax deduction, savings
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