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

Jean-Olivier Hairault (), Francois Langot () and Thepthida Sopraseuth ()

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

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: 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: http://halshs.archives-ouvertes.fr/halshs-00178465/en/
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Published, International Economic Review, 2008, 49, 3, 755-797

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http://halshs.archives-ouvertes.fr/docs/00/17/84/65/PDF/Laffer.pdf (application/pdf)

Related works:
Journal Article: QUANTIFYING THE LAFFER CURVE ON THE CONTINUED ACTIVITY TAX IN A DYNASTIC FRAMEWORK (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00178465_v1

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