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Pension Reform and Labor Market Incentives

Walter Fisher and Christian Keuschnigg

No 2057, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper investigates how parametric reform in a pay-as-you-go pension system with a tax benefit link affects retirement and work incentives of prime-age workers. We find that postponed retirement tends to harm incentives of prime-age workers in the presence of a tax benefit link, thereby creating a policy trade-off in stimulating aggregate labor supply. We show how several popular reform scenarios are geared either towards young or old workers, or, indeed, both groups under appropriate conditions. We also provide a sharp characterization of the excess burden of pension insurance and show how it depends on the behavioral supply elasticities of the extensive and intensive margins and the effective tax rates implicit in contribution rates.

Keywords: pension reform; retirement; hours worked; tax benefit link; actuarial adjustment; excess burden (search for similar items in EconPapers)
JEL-codes: H55 J26 (search for similar items in EconPapers)
Date: 2007
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Related works:
Journal Article: Pension reform and labor market incentives (2010) Downloads
Working Paper: Pension Reform and Labor Market Incentives (2007) Downloads
Working Paper: Pension Reform and Labor Market Incentives (2007) Downloads
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