Social security, retirement age and optimal income taxation

Cremer, Helmuth; Lozachmeur, Jean‐Marie; Pestieau, Pierre

doi:10.1016/j.jpubeco.2003.10.003

Cited by 105 publications

(86 citation statements)

References 15 publications

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“…The setting is inspired by Cremer et al (2004). Consider an individual with productivity w, dividing his lifetime with duration normalized to one into a period of full activity and a period of retirement.…”

Section: Preferences and Types Of Individualsmentioning

confidence: 99%

Disability Testing and Retirement

Cremer¹,

Lozachmeur²

2007

The B.E. Journal of Economic Analysis &Amp; Policy

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This paper studies the design of retirement and disability policies. It illustrates the often observed exit from the labor force of healthy workers through disability insurance schemes. Two types of individuals, disabled and leisure-prone ones, have the same disutility for labor and cannot be distinguished. However, they are not counted in the same way in social welfare. Benefits depend on retirement age and on the (reported) health status. We determine first-and second-best optimal benefit levels and retirement ages and focus on the distortions which may be induced in the individuals' retirement decision. Then we introduce the possibility of testing which sorts out disabled workers from healthy but retirement-prone workers. We show that such testing can increase both social welfare and the rate of participation of elderly workers; in addition disabled workers are better taken care of. It is not optimal to test all applicants, nor to apply testing to all types of benefits. Surprisingly, the (second-best) solution may imply later retirement for the disabled than for the leisure prone. In that case, the disabled are compensated by higher benefits.

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Section: Preferences and Types Of Individualsmentioning

confidence: 99%

Disability Testing and Retirement

Cremer¹,

Lozachmeur²

2007

The B.E. Journal of Economic Analysis &Amp; Policy

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“…The decline in male labor force participation has been attributed to a variety of factors. The institution of Social Security in 1935; its expansion to include disability insurance and Medicaid; and the Revenue Act of 1942, which granted tax incentives for firms to establish private pension plans, have been found to have contributed significantly to the decline (for example, see Burtless and Moffitt 1984, Helmuth Cremer, et al 2004, Gruber 2000, and Lumsdaine, et al 1997. These policies provided both greater incentives to claim a work-inhibiting disability and to retire earlier from the labor market.…”

Section: Introductionmentioning

confidence: 99%

What's Up with the Decline in Female Labor Force Participation?

Hotchkiss

2005

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in

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“…Third, there is the more fundamental question of whether extra resources should be expended to make individuals more "equal" or whether it is more appropriate to use this money to compensate the less healthy individuals. 2 This paper addresses these questions by studying the design of a social security scheme which can be supplemented by health policies including subsidization of health expenditures and public provision of health care. We consider a setting where agents differ both in their productivity and in their health status.…”

Section: Introductionmentioning

confidence: 99%

Retirement Age and Health Expenditures

Crémer¹,

Lozachmeur²,

Pestieau³

2006

Annales d'Économie et de Statistique

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This paper studies the design of pension benefits and contributions when an individual's health status (disutility of continued activity) is endogenous and depends on his consumption of health services. Health services can be subsidized (in a linear or non linear way, depending on the information structure). Uniform public provision of health services is also considered. We show that like with exogenous health status, the secondbest policy may induce early retirement for some types of individuals. Furthermore, whatever the specific information structure considered (individual levels or anonymous transactions) for health services, a subsidization of health expenditures obtains under fairly plausible assumptions. Third, when the information structure permits only linear subsidies, the case for uniform public provision of health services (which can be supplemented but not resold) appears to be quite strong.

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Social security, retirement age and optimal income taxation

Cited by 105 publications

References 15 publications

Disability Testing and Retirement

Disability Testing and Retirement

What's Up with the Decline in Female Labor Force Participation?

Retirement Age and Health Expenditures

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