Pension Reform and Labor Market Incentives

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 l...

Ausführliche Beschreibung

Bibliographische Detailangaben
Link(s) zu Dokument(en):IHS Publikation
Hauptverfasser: Fisher, Walter H., Keuschnigg, Christian
Format: IHS Series NonPeerReviewed
Sprache:Englisch
Veröffentlicht: Institut für Höhere Studien 2007
Beschreibung
Zusammenfassung: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.;