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Is there a Social Security Tax Wedge?

Author

Listed:
  • Alessandro Cigno
Abstract
A Beveridgean pension scheme invariably reduces the marginal return to labour, and will thus discourage labour. A Bismarckian scheme can do so only if it is not actuarially fair, or in the presence of credit rationing. In any case, the same pension contribution will discourage labour less if the scheme is Bismarckian than if it is Beveridgean. A Bismarckian scheme may even encourage labour.

Suggested Citation

  • Alessandro Cigno, 2006. "Is there a Social Security Tax Wedge?," CESifo Working Paper Series 1772, CESifo.
    • Handle: RePEc:ces:ceswps:_1772
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    References listed on IDEAS

    as
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    8. repec:bla:scandj:v:103:y:2001:i:3:p:505-24 is not listed on IDEAS
    9. Alessandro Cigno & Luca Casolaro & Furio C. Rosati, 2002. "The Impact of Social Security on Saving and Fertility in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(2), pages 189-211, May.
    10. Cigno, Alessandro & Rosati, Furio C., 1996. "Jointly determined saving and fertility behaviour: Theory, and estimates for Germany, Italy, UK and USA," European Economic Review, Elsevier, vol. 40(8), pages 1561-1589, November.
    11. Robert Fenge & Martin Werding, 2004. "Ageing and the tax implied in public pension schemes: simulations for selected OECD countries," Fiscal Studies, Institute for Fiscal Studies, vol. 25(2), pages 159-200, June.
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    Citations

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    Cited by:

    1. Gilles Le Garrec, 2015. "Increased longevity and social security reform: questioning the optimality of individual accounts when education matters," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(2), pages 329-352, April.
    2. Cigno, A., 2016. "Conflict and Cooperation Within the Family, and Between the State and the Family, in the Provision of Old-Age Security," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 609-660, Elsevier.
    3. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09hi6860cc6 is not listed on IDEAS
    4. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09hi6860cc6 is not listed on IDEAS
    5. Heijdra, Ben J. & Ligthart, Jenny E., 2007. "Fiscal policy, monopolistic competition, and finite lives," Journal of Economic Dynamics and Control, Elsevier, vol. 31(1), pages 325-359, January.
    6. Gustafsson, Johan, 2021. "Implications of Pension Illiteracy for Labor Supply and Redistribution," Umeå Economic Studies 993, Umeå University, Department of Economics.
    7. Gilles Le Garrec & Stéphane Lhuissier, 2011. "Life expectancy, heavy work and the return to education: lessons for the social security reform," SciencePo Working papers Main hal-01069511, HAL.
    8. Giuseppe Carone & Jan Host Schmidt & Gaetan Nicodeme, 2007. "Tax revenues in the European Union: Recent trends and challenges ahead," European Economy - Economic Papers 2008 - 2015 280, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    9. Alessandro Cigno, 2010. "How to Avoid a Pension Crisis: A Question of Intelligent System Design ," CESifo Economic Studies, CESifo Group, vol. 56(1), pages 21-37, March.
    10. Kerstin Roeder, 2009. "Optimal taxes and pensions in a society with myopic agents," Working Papers 2009/28, Institut d'Economia de Barcelona (IEB).
    11. Carlos Vidal-Meliá & Mar𨁤el Carmen Boado-Penas, 2013. "Compiling the actuarial balance for pay-as-you-go pension systems. Is it better to use the hidden asset or the contribution asset?," Applied Economics, Taylor & Francis Journals, vol. 45(10), pages 1303-1320, April.
    12. Kerstin Roeder, 2009. "Optimal taxes and pensions in a society with myopic agents," Working Papers 2009/28, Institut d'Economia de Barcelona (IEB).
    13. Gustafsson, Johan, 2023. "Public pension reform with ill-informed individuals," Economic Modelling, Elsevier, vol. 121(C).
    14. Devriendt, Willem & Heylen, Freddy & Jacobs, Arthur, 2023. "Coping with demographic change: macroeconomic performance and welfare inequality effects of public pension reform," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(3), pages 425-449, July.
    15. Keuschnigg, Christian & Fisher, Walter, 2011. "Life-Cycle Unemployment, Retirement and Parametric Pension Reform," Economics Working Paper Series 1119, University of St. Gallen, School of Economics and Political Science.
    16. Antonis Adam, 2007. "Pension Benefits, Labour Market Institutions, and Unemployment," LABOUR, CEIS, vol. 21(4‐5), pages 595-610, December.
    17. Yohei Sekiguchi & Masatoshi Jinno, 2018. "Beveridge Versus Bismarck Pension Systems: Considering Fertility Rates And Skill Distribution," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(05), pages 1141-1153, December.
    18. Frank N. Caliendo & T. Scott Findley, 2020. "Myopia, education, and social security," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 694-720, June.
    19. Gilles Le Garrec, 2012. "Social security and growth in an aging economy : the case of acturial fairness," Working Papers hal-01070354, HAL.
    20. repec:hal:wpspec:info:hdl:2441/eu4vqp9ompqllr09hi6860cc6 is not listed on IDEAS
    21. Gilles Le Garrec, 2012. "Social security and growth in an aging economy : the case of acturial fairness," SciencePo Working papers Main hal-01070354, HAL.
    22. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09hi6860cc6 is not listed on IDEAS
    23. Gustafsson, Johan, 2021. "Public Pension Reform and the Equity-Efficiency Trade-off," Umeå Economic Studies 992, Umeå University, Department of Economics.
    24. repec:spo:wpmain:info:hdl:2441/53r60a8s3kup1vc9jiq0m4pg6 is not listed on IDEAS
    25. repec:hal:spmain:info:hdl:2441/53r60a8s3kup1vc9jiq0m4pg6 is not listed on IDEAS

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    More about this item

    Keywords

    tax wedge; labour; public pensions; Bismarck; Beveridge; implicit pension tax;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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