Pension reform and labor market incentives
Journal
Journal of Population Economics
ISSN
0933-1433
ISSN-Digital
1432-1475
Type
journal article
Date Issued
2010-03
Author(s)
Abstract
This paper investigates how parametric reform in a pay-as-you-go pension system with a tax benefit link affects retirement incentives and work incentives of prime-age workers. We find that postponed retirement tends to harm incentives of prime-age workers in the presence of a tax benefit link, thereby creating a policy trade-off in stimulating aggregate labor supply. We show how several popular reform scenarios are geared either towards young or old workers, or, indeed, both groups under appropriate conditions. We also provide a sharp characterization of the excess burden of pension insurance and show how it depends on the behavioral supply elasticities on the extensive and intensive margins and the effective tax rates implicit in contribution rates.
Language
English
Keywords
Pension reform
retirement
hours worked
tax benefit link
actuarial adjustment
excess burden
HSG Classification
contribution to scientific community
Refereed
No
Publisher
Springer
Publisher place
Berlin Heidelberg
Volume
23
Number
2
Start page
769
End page
803
Pages
35
Subject(s)
Eprints ID
37135