Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73214
Authors: 
Pech, Susanne
Year of Publication: 
2002
Series/Report no.: 
Working Paper, Department of Economics, Johannes Kepler University of Linz 0209
Abstract: 
In this paper we analyse several measures which are typically included in a social security reform: a cut in the social security benefits, an increase in the social security tax and tax incentives for the purchase of private life annuities, which have recently become quite popular at the political level. In a two-period model with uncertainty about life-expectancy, it is shown that for a given annuity price tax incentives for life annuities increases consumption expenditures in old-age, while the opposite occurs by a cut in the social security benefits and by an increase of the social security tax. The main result is that a tax incentive for life annuities and a cut in the social security benefits alleviate adverse selection in the private annuity market, while an increase in the social security tax exacerbates adverse selection.
Subjects: 
annuity market
uncertain lifetime
adverse selection
tax incentives
social security
JEL: 
D82
D91
G22
H24
H55
Document Type: 
Working Paper

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