Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/108275 
Year of Publication: 
2012
Series/Report no.: 
IEHAS Discussion Papers No. MT-DP - 2012/33
Publisher: 
Hungarian Academy of Sciences, Institute of Economics, Centre for Economic and Regional Studies, Budapest
Abstract: 
The tax system redistributes labor incomes among workers, the pension system redistributes incomes from workers to pensioners. We consider a linear transfer system, where workers pay pension contributions and personal income taxes and pensioners receive proportional benefits, while workers and pensioners enjoy basic income. Every worker maximizes his discounted lifetime utility function, depending on young- and old-age consumption plus leisure. The government chooses a transfer system which maximizes the undiscounted social welfare function. Our major result is as follows: The optimal transfer system balances the efficiency of proportional pensions and the guarantee of the basic income.
Subjects: 
personal income tax
pension system
optimal redistribution
JEL: 
H24
I31
J22
J26
ISBN: 
978-615-5243-37-0
Document Type: 
Working Paper

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