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Tax Incentives and the Demand for Life Insurance: Evidence from ItalyTullio JappelliUniversity of Naples Federico II - Department of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Center for Studies in Economics and Finance - CSEF Luigi PistaferriStanford University; Centre for Economic Policy Research (CEPR) May 2001 CEPR Discussion Paper No. 2787 Abstract: The theoretical literature suggests that taxation can have a large impact on household portfolio selection and allocation. In this Paper we consider the tax treatment of life insurance, considering the cancellation of tax incentives in Italian life insurance contracts for investors with high marginal tax rates and the introduction of incentives for those with low rates. Using repeated cross-sectional data from 1989 to 1998, we find that the tax reforms had no effect on the decision to invest in life insurance or the amount invested. The likely explanations are the lack of information and lack of commitment to long-term investment.
Number of Pages in PDF File: 44 Keywords: Portfolio choice, saving, tax incentives JEL Classification: D91, H20 working papers seriesDate posted: May 10, 2001Suggested CitationContact Information
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