Quantifying the Laffer Curve on the Continued Activity Tax in a Dynastic Framework

Jean-Olivier Hairault, Francois Langot and Thepthida Sopraseuth

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Abstract: It is argued that the tax on continued activity should be removed by implementing actuariallyfair schemes. However, these schemes cannot fund the expected Social Security deficit. This paper proposes to give individuals a fraction of the actuarially-fair incentives in the case of postponed retirement. Social Security faces a trade-off between giving enough incentives to make individualselay retirement and giving little increase in pensions in order to help finance its expected deficit. This trade-off is captured by a Laffer curve. Finally, when the Social Security system aims to maximize welfare, the optimal tax on postponed retirement is still strictly positive.

Keywords: actuarially-fair benefits; retirement behavior and wealth; actuarially-fair benefits. (search for similar items in EconPapers)
Date: 2008-07
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00178465v1
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Citations: View citations in EconPapers (9)

Published in International Economic Review, 2008, 49 (3), pp.755-797. ⟨10.1111/j.1468-2354.2008.00497.x⟩

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Related works:
Journal Article: QUANTIFYING THE LAFFER CURVE ON THE CONTINUED ACTIVITY TAX IN A DYNASTIC FRAMEWORK (2008)
Working Paper: Quantifying the Laffer Curve on the Continued Activity Tax in a Dynastic Framework (2008)
Working Paper: Quantifying the Laffer Curve on the Continued Activity Tax in a Dynastic Framework (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00178465

DOI: 10.1111/j.1468-2354.2008.00497.x

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