The growth effects of capital income tax-funded pension program under endogenous retirement

Yaqi Wang ()
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Yaqi Wang: Nagoya University

Economics Bulletin, 2025, vol. 45, issue 4, 2120 - 2128

Abstract: This study aims to clarify the effects of capital income tax-funded pension reform on economic growth under endogenous retirement choice. By employing a two-period overlapping-generations (OLG) model with endogenous growth, the present study examines the effects of capital income tax on endogenous retirement and economic growth. When retirement decisions are endogenous, capital income tax affects economic growth through two opposing effects: a negative effect by lowering savings and a positive effect by decreasing the elderly labor supply. If elderly labor productivity is relatively low and within a certain range, an inverted U-shaped relationship between capital income tax and economic growth may exist.

Keywords: Endogenous retirement decisions; Capital income tax; pension; Economic growth (search for similar items in EconPapers)
JEL-codes: E6 H2 (search for similar items in EconPapers)
Date: 2025-12-30
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-26-00025

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