Arbeitspapier

Is there a social security tax wedge?

A Beveridgean pension scheme invariably introduces a wedge between the wage rate and the marginal take-home pay. A Bismarckian one can do so only if it is not actuarially fair, or in the presence of credit rationing. Interestingly, if the two possible sources of distortion are present at the same time, they will tend to offset each other. The distortion may even change sign (the wedge may become a premium). In any case, the same pension contribution will discourage labour less if the scheme is Bismarckian, than if it is Beveridgean.

Language
Englisch

Bibliographic citation
Series: IZA Discussion Papers ; No. 1967

Classification
Wirtschaft
Fiscal Policies and Behavior of Economic Agents: Household
Social Security and Public Pensions
Wages, Compensation, and Labor Costs: Public Policy
Subject
tax wedge
Bismarck
Beveridge
public pensions
implicit pension tax
labour

Event
Geistige Schöpfung
(who)
Cigno, Alessandro
Event
Veröffentlichung
(who)
Institute for the Study of Labor (IZA)
(where)
Bonn
(when)
2006

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Cigno, Alessandro
  • Institute for the Study of Labor (IZA)

Time of origin

  • 2006

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