Optimal Redistribution with Intensive and Extensive Labor Supply Margins: A Life-Cycle Perspective

Jean-Baptiste Michau

Working Papers from HAL

Abstract: While the participation decision is discrete in a static context, i.e. to work or not to work, such is not the case in a life-cycle context where workers choose the fraction of their lifetime that they spend working. In this paper, I therefore characterize the optimal redistribution policy in a life-cycle framework with both an intensive and an extensive margin of labor supply. The government should optimally design a history-dependent social security system which induces higher productivity individuals to retire later. Some redistribution therefore needs to be done through the pension system; a standard non-linear income tax is not enough.

Keywords: Extensive margin; Optimal redistribution; Retirement age; Social security (search for similar items in EconPapers)
Date: 2011-11-08
New Economics Papers: this item is included in nep-dge, nep-lab and nep-pub
Note: View the original document on HAL open archive server: https://hal.science/hal-00639121
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