Abstract: Substantial evidence suggests that savings behavior may depart from neoclassical
optimization. This article examines the implications of raising the savings rate – whether
through social security, retirement plans, or otherwise – for labor supply, where labor supply is
determined by behavioral utility functions that reflect the non-neoclassical character of savings
behavior. Under one formulation, raising the targeted savings rate has the same effect on labor
supply as that of raising the labor income tax rate; under a second, raising the targeted savings
rate has no effect on labor supply; and under a third, raising the targeted savings rate increases
labor supply regardless of the slope of the labor supply curve. Effects on labor supply are
particularly consequential because of the significant preexisting distortion due to labor income
taxation.