Social Security, Retirement Age and Optimal Income Taxation

Helmuth Cremer, Jean-Marie Lozachmeur and Pierre Pestieau

No 693, CESifo Working Paper Series from CESifo

Abstract: It is often argued that implicit taxation on continued activity of elderly workers is responsible for the widely observed trend towards early retirement. In a world of laissez-faire or of first-best efficiency, there would be no such implicit taxation. The point of this paper is that when first-best redistributive instruments are not available, because some variables are not observable, the optimal policy does imply a distortion of the retirement decision. Consequently, the inducement of early retirement may be part of the optimal tax-transfer policy. We consider a model in which individuals differ in their productivity and their capacity to work long and choose both their weekly labor supply and their age of retirement. We characterize the optimal non linear tax-transfer that maximizes a utilitarian welfare function when weekly earnings and the length of active life are observable while individuals’ productivity and health status are not observable.

Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo_wp693.pdf (application/pdf)

Related works:
Journal Article: Social security, retirement age and optimal income taxation (2004)
Working Paper: Social security, retirement age and optimal income taxation (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_693

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().