Is There a Social Security Tax Wedge?

Alessandro Cigno

No 1967, IZA Discussion Papers from IZA Network @ LISER

Abstract: A Beveridgean pension scheme invariably introduces a wedge between the wage rate and the marginal take-home pay. A Bismarckian one can do so only if it is not actuarially fair, or in the presence of credit rationing. Interestingly, if the two possible sources of distortion are present at the same time, they will tend to offset each other. The distortion may even change sign (the wedge may become a premium). In any case, the same pension contribution will discourage labour less if the scheme is Bismarckian, than if it is Beveridgean.

Keywords: public pensions; Beveridge; Bismarck; tax wedge; implicit pension tax; labour (search for similar items in EconPapers)
JEL-codes: H31 H55 J38 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2006-02
New Economics Papers: this item is included in nep-lab, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - published in: Labour Economics, 2008, 15 (1), 68-77

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Related works:
Journal Article: Is there a social security tax wedge (2008)
Working Paper: Is there a Social Security Tax Wedge? (2006)
Working Paper: Is there a social security tax wedge? (2006)
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