The Implication of Employee Stock Options and Holding Gains for Disposable Income and Household Saving Rates in Finland

Abstract:     
This article discusses the effect of holding gains and employee stock options (ESO) on the measured household saving ratio and on disposable income. The income concept of the SNA 93 does not include realized holding gains, but taxes paid on such gains are nevertheless deducted from income. In contrast to many other OECD countries, Finland records ESO in the changes in assets following the same accounting convention as for holding gains. The article presents three income concepts and it analyses in the case of each the effect of holding gains, ESO and their taxes on disposable income and the saving rate. The first income concept is that of the Finnish national accounts. The second includes holding gains and ESO, as well as their taxes, as expenditure, whereas the third income concept excludes holding gains, ESO and their taxes.

Keywords: National accounts, SNA93, capital gains, sector accounts, household sector, other changes in assets

JEL Classification: E21, E22

Accepted Paper Series