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Title:Is there a social security tax wedge? PDF Logo
Authors:Cigno, Alessandro
Issue Date:2006
Series/Report no.:IZA Discussion Papers 1967
Abstract:A Beveridgean pension scheme invariably introduces a wedge between the wage rate and the marginal take-home pay. A Bismarckian one can do so only if it is not actuarially fair, or in the presence of credit rationing. Interestingly, if the two possible sources of distortion are present at the same time, they will tend to offset each other. The distortion may even change sign (the wedge may become a premium). In any case, the same pension contribution will discourage labour less if the scheme is Bismarckian, than if it is Beveridgean.
Subjects:tax wedge
public pensions
implicit pension tax
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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