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Public Pensions in a Multi-Period Mirrleesian Income Tax Model

Spencer Bastani, Sören Blomquist and Luca Micheletto

No 6206, CESifo Working Paper Series from CESifo Group Munich

Abstract: Using an OLG model with skill uncertainty and private savings, we investigate whether an optimally designed set of public pension transfers can usefully supplement a nonlinear labor income tax as a welfare-enhancing policy instrument. We consider a Mirrleesian setting where agents' skills are private information and highlight that, even though pensions, by crowding out private savings, adversely affect the achievement of the golden-rule, they can be used as a mimicking-deterring device that makes it easier for the government to achieve the desired redistributive goals.

Keywords: public pensions; dynamic optimal income taxation; capital income taxation; tagging (search for similar items in EconPapers)
JEL-codes: H21 H55 H63 (search for similar items in EconPapers)
Date: 2016
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