Should Old-Age Benefits Be Earnings-Tested?

Niku Määttänen and Panu Poutvaara

No 2616, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the welfare effects of earnings testing flat-rate old-age benefits in a quantitative overlapping generations model with idiosyncratic labor income risk. In our model economy, even a moderate earnings testing reduces individuals’ expected lifetime utility, whenever other taxes are taken into account. Moreover, it also lowers the realized lifetime utilities of those at the bottom of the lifetime utility distribution.

Keywords: means-testing; retirement; social security (search for similar items in EconPapers)
JEL-codes: C68 H55 J26 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007-02
New Economics Papers: this item is included in nep-dge, nep-pbe and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Should Old-age Benefits Be Earnings-tested (2006)
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