Pension Reform and Labor Market Incentives

Walter Fisher and Christian Keuschnigg

University of St. Gallen Department of Economics working paper series 2007 from Department of Economics, University of St. Gallen

Abstract: This paper investigates how parametric reform in a pay-as-you-go pension system with a tax benefit link affects retirement incentives and work incentives of prime-age workers. We find that postponed retirement tends to harm incentives of prime-age workers in the presence of a tax benefit link, thereby creating a policy trade-off in stimulating aggregate labor supply. We show how several popular reform scenarios are geared either towards young or old workers, or, indeed, both groups under appropriate conditions. We also provide a sharp characterization of the excess burden of pension insurance and show how it depends on the behavioral supply elasticities on the extensive and intensive margins and the effective tax rates implicit in contribution rates.

Keywords: Pension reform; retirement; hours worked; tax benefit link; actuarial adjustment; excess burden (search for similar items in EconPapers)
JEL-codes: H55 J26 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2007-04
New Economics Papers: this item is included in nep-age, nep-lab and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://ux-tauri.unisg.ch/RePEc/usg/dp2007/DP-13-Fi.pdf (application/pdf)

Related works:
Journal Article: Pension reform and labor market incentives (2010)
Working Paper: Pension Reform and Labor Market Incentives (2007)
Working Paper: Pension Reform and Labor Market Incentives (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:dp2007:2007-13

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