New Retirement Savings Account Available Soon

A new savings account called the Roth 401(k) could be made available to employees of specific companies as early as next year. This new account gives people the opportunity to possibly pay less taxes in the long run.
This is how it works: workers pay tax on earnings before setting aside the money for retirement. In exchange, the money grows and can be withdrawn tax-free. It's modeled on the Roth individual retirement account, which works the same way.

It's the opposite of the 401(k) accounts currently used. Those let employees save and invest some of their salary before paying tax, but taxes come due when the money is withdrawn in retirement.

My question to you all is this: Will this cause an Income Effect or a Substitution Effect in regards to Labor Supply. If you look at this as an increase in wage, then the income effect would say that people would work less. The substitution effect says that as wages increase, hours worked increase due to increased opportunity costs. Which do you think will occur?

My gut says that the income effect will take over. If people can save more of their hard-earned money and pay less in taxes now rather than pay more in taxes later, then we will see people retiring earlier. What do you all think?