Optimal pensions with endogenous labour supply
Optimal pensions with endogenous labour supply
We show that a two-part pension system provides optimal capital accumulation without distorting labour supply, thereby achieving the first-best. An economy with too little retirement saving should combine a negative income tax with a consumption tax to replicate the first-best allocation without using any lump-sum taxes. Our results are shown in a classic Diamond overlapping generations model that is augmented with endogenous labour supply on the intensive margin.
Hatcher, Michael
e0846252-6d46-44f8-ba3c-05cf1fba64ab
30 October 2024
Hatcher, Michael
e0846252-6d46-44f8-ba3c-05cf1fba64ab
Abstract
We show that a two-part pension system provides optimal capital accumulation without distorting labour supply, thereby achieving the first-best. An economy with too little retirement saving should combine a negative income tax with a consumption tax to replicate the first-best allocation without using any lump-sum taxes. Our results are shown in a classic Diamond overlapping generations model that is augmented with endogenous labour supply on the intensive margin.
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Accepted/In Press date: 16 October 2024
e-pub ahead of print date: 23 October 2024
Published date: 30 October 2024
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Local EPrints ID: 496024
URI: http://eprints.soton.ac.uk/id/eprint/496024
ISSN: 0165-1765
PURE UUID: 4d0dd96b-f99f-4e7b-9310-433b531cc49c
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Date deposited: 29 Nov 2024 16:10
Last modified: 30 Nov 2024 02:50
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