Playing dead pool against the contributions system

Vincenzo Alfano and Salvatore Capasso

The Journal of the Economics of Ageing, 2021, vol. 20, issue C

Abstract: This paper examines the rationale behind social contribution evasion. The main idea is that evasion of social security contributions implies loss of future benefits, and in a system in which pensions are proportional to contributions, one would expect that, ceteris paribus, a decrease in the alternative measures of saving towards one’s pension or an increase in subjective life expectancy would lead workers to contribute more towards their own pensions. By using OLS and Tobit estimators, we test whether contribution evasion is part of an intertemporal portfolio allocation and competes with other forms of wealth-accumulating assets. Empirical results on repeated cross-sectional Italian microdata confirm that contribution evasion decreases as life expectancy increases, and increases when the return on other long-term wealth-accumulating assets increases.

Keywords: Contribution evasion; Social security; Life expectancy (search for similar items in EconPapers)
JEL-codes: H26 H55 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joecag:v:20:y:2021:i:c:s2212828x21000359

DOI: 10.1016/j.jeoa.2021.100342

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