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Title:Pension reform and labor market incentives PDF Logo
Authors:Fisher, Walter H.
Keuschnigg, Christian
Issue Date:2007
Series/Report no.:CESifo working paper 2057
Abstract:This paper investigates how parametric reform in a pay-as-you-go pension system with a tax benefit link affects retirement 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 of the extensive and intensive margins and the effective tax rates implicit in contribution rates.
JEL:H55
J26
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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