April 23, 2014
Saving behavior and risk taking: Evidence from the Dutch Tax Reform in 2001
We estimate the impact of the marginal tax rate on the ownership in risk-bearing assets and on the share in total assets. In contrast to the literature, we use instrumental variables to correct for endogeneity of the marginal tax rate on capital income.
![No title No title](https://www.cpb.nl/sites/default/files/publication/saving-behavior-and-risk-taking-evidence-from-the-dutch-tax-reform-in-2001/afbeelding/dp273-voorzijde-180x255.png)
Moreover, we use the exogenous variation in marginal tax rates from the Dutch tax reform of 2001. We find that a change in the difference in the marginal tax rate between risky assets and riskless assets has a significant positive impact on the ownership of risky assets and growth funds. A ten percentage point increase of the marginal rate results in a 0.5 percentage point increase of the probability of owning risky assets. The tax rate has no impact on the share of risky assets if we correct for endogeneity and selection.
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Authors
Erik Floor
![Arjan Lejour Photo of Arjan Lejour](https://www.cpb.nl/sites/default/files/user/pictures/picture-89441-1544015954.jpg)