Women's Labor Supply Incentives and Old-Age Income Redistribution

Fabian Kindermann and Veronika Pueschel

No 18895, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The risk of ending up poor in old age is shaped at young ages and it is concentrated among women. To counteract old-age poverty, many countries redistribute income through the pension system on a lifetime-earnings basis. Using a quantitative model, we argue that a pension system that uses annual instead of lifetime earnings as basis for redistribution leads to much better labor market outcomes and a superior old-age income distribution. Such a system comes with broad employment incentives, especially for individuals prone to old-age poverty risk. As such, it addresses the causes of old-age poverty and not only its consequences.

Keywords: progressive pensions; Labor supply; employment incentives (search for similar items in EconPapers)
JEL-codes: D15 H31 H55 J21 J22 (search for similar items in EconPapers)
Date: 2024-03
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