A Quantitative Investigation of the Laffer Curve on the Continued Work Tax: The French Case

Jean-Olivier Hairault, Francois Langot and Thepthida Sopraseuth

No 1499, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: It is often argued that the tax on continued work should be removed by implementing actuarially fair schemes. However, these schemes cannot help fund the expected Social Security deficit. This paper proposes to give individuals only a fraction of the marginal actuarially fair incentives in case of postponed retirement. Social Security then faces a trade-off between giving enough incentives to make individuals actually delay retirement and giving little increase in pensions in order to help finance its expected deficit. This trade-off is captured by a Laffer curve that we quantify on French data. Furthermore, we analyze the interactions between wealth and retirement behavior.

Keywords: actuarially fair benefits; retirement behavior and wealth (search for similar items in EconPapers)
JEL-codes: H31 H55 J26 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2005-02
New Economics Papers: this item is included in nep-dge and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - published in: International Economic Review, 2008, 49(3), 755-797

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Related works:
Working Paper: A quantitative investigation of the Laffer curve on the continued work tax: the French case (2004)
Working Paper: A Quantitative Investigation of the Laffer Curve on the Continued Work Tax: The French Case (2004)
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