This study examines the tax-favored retirement savings behavior of non-self-employed households. Our estimates suggest that perceptions of the household's marginal tax rate are of limited importance in the decision to invest in tax-deferred savings instruments. However, the household's income is estimated to significantly affect the decision. We also consider the effect that the Tax Reform Act of 1986 may have on the purchase of tax-favored retirement savings instruments.
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Collins et al. (1988) studied this question.
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