EconPapers    
Economics at your fingertips  
 

Flexible Retirement and Optimal Taxation

Abdoulaye Ndiaye ()
Additional contact information
Abdoulaye Ndiaye: Federal Reserve Bank of Chicago

No WP-2018-18, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: This paper studies optimal insurance against private idiosyncratic shocks in a life-cycle model with intensive labor supply and endogenous retirement. In this environment, the optimal labor tax is hump-shaped in age: insurance benefits of taxation push for increasing-in-age taxes while rising labor supply elasticities and optimal late retirement of highly productive workers push for lowering taxes for old workers. In calibrated numerical simulations, the optimum achieves sizable welfare gains that age-dependent taxes do not deliver under the status quo US Social Security. Nevertheless, an optimal combination of age-dependent linear taxes with increasing-in-age retirement benefits generates welfare gains close to optimal.

Keywords: Retirement; Optimal Taxation; Social Security; Continuous- Time; Optimal Stopping (search for similar items in EconPapers)
JEL-codes: H21 H55 J26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-cmp, nep-dge, nep-ias and nep-pbe
Date: 2017-11-03, Revised 2018-11-05
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.chicagofed.org/~/media/publications/wo ... 18/wp2018-18-pdf.pdf Full text (application/pdf)

Related works:
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:fip:fedhwp:wp-2018-18

Ordering information: This working paper can be ordered from
http://www.chicagofe ... ation_order_form.cfm

DOI: 10.21033/wp-2018-18

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Bernie Flores ().

 
Page updated 2019-04-22
Handle: RePEc:fip:fedhwp:wp-2018-18