Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/200588
Authors: 
N'Diaye, Abdoulaye E.
Year of Publication: 
2018
Series/Report no.: 
Working Paper 2018-18
Abstract: 
This paper studies optimal insurance against private idiosyncratic shocks in a life-cycle model with intensive labor supply and endogenous retirement. In this environment, the optimal labor tax is hump-shaped in age: insurance benefits of taxation push for increasing-in-age taxes while rising labor supply elasticities and optimal late retirement of highly productive workers push for lowering taxes for old workers. In calibrated numerical simulations, the optimum achieves sizable welfare gains that age-dependent taxes do not deliver under the status quo U.S. Social Security. Nevertheless, an optimal combination of age-dependent linear taxes with increasing-in-age retirement benefits generates welfare gains close to optimal.
Subjects: 
Retirement
Optimal Taxation
Social Security
Continuous-Time
Optimal Stopping
JEL: 
H21
H55
J26
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
Social Media Mentions:

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