Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108126
Authors: 
Simonovits, András
Year of Publication: 
2008
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2008/5
Abstract: 
This paper analyzes the interconnections of underreported earnings, savings and oldage pension with the help of a most simple, elementary model. The workers can be divided into three groups: 1) well-paid who report their full earnings, 2) well-paid who report only the minimum earnings (evaders) and 3) the poorly paid. We assume that the evaders save a significant part of their hidden earnings for their old age. We compare three pension systems of equal size: (i) the proportional, (ii) the proportional plus basic pension and (iii) the proportional with means testing. Our major result is as follows: if the evaders can be recognized and excluded, then the means-tested system is superior to the basic system.
Subjects: 
reporting earnings
proportional pensions
basic pensions
meansassisted pensions
JEL: 
H55
D91
ISBN: 
978-963-9796-17-1
Document Type: 
Working Paper

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