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Are contributions to public pension programmes a tax on employment?

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Author Info
Disney Richard
Abstract

"Many studies describe the potentially adverse impact on employment of the payroll costs of financing public pension programmes. Conventionally, empirical studies treat contributions to public pension programmes as a pure tax (in, for example, calculations of the tax wedge by OECD). But this approach ignores any future rights to benefits that are perceived by contributors. In fact, public pension programmes contain both an 'actuarial' and a 'redistributive' component - the former closer to saving, the latter a tax. The paper constructs indicators of the tax component of pension programmes, both between and within generations, across a range of OECD countries and time periods. It uses these measures in a cross-country panel analysis of the determinants of age and gender-specific economic activity rates. The results reveal robust evidence that when public pension programme contributions are broken down into a tax component and a savings component, the tax component of the payroll contribution reduces economic activity rates among women while a higher retirement saving component has the opposite effect. There is little evidence that average tax rates, however constructed, have any adverse impact on the economic activity rates of men." Copyright © Blackwell Publishing 2004.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0327.2004.00124.x
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Publisher Info
Article provided by CEPR, CES, MSH in its journal Economic Policy.

Volume (Year): 19 (2004)
Issue (Month): 39 (07)
Pages: 267-311
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:bla:ecpoli:v:19:y:2004:i:39:p:267-311

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  3. Christian Keuschnigg & Mirela Keuschnigg & Christian Jaag, 2009. "Aging and the Financing of Social Security in Switzerland," University of St. Gallen Department of Economics working paper series 2009 2009-26, Department of Economics, University of St. Gallen. [Downloadable!]
  4. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584_v1, HAL. [Downloadable!]
  5. Richard Disney, 2005. "Household Saving Rates and the Design of Social Security Programmes: Evidence from a Country Panel," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  6. Alessandro Cigno, 2009. "How to avoid a pension crisis: A question of intelligent system design," CHILD Working Papers wp04_09, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
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  7. Richard Disney, 2006. "Macroeconomic Performance and the Design of Public Pension Programmes," The Economic and Social Review, Economic and Social Studies, vol. 37(2), pages 175-195. [Downloadable!]
  8. Kyrre Stensnes and Nils Martin Stølen, 2007. "Pension Reform in Norway. Microsimulating effects on government expenditures, labour supply incentives and benefit distribution," Discussion Papers 524, Research Department of Statistics Norway. [Downloadable!]
  9. Panu Poutvaara, 2005. "Social Security Incentives, Human Capital Investment and Mobility of Labor," IZA Discussion Papers 1729, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Norikazu Tawara & Gerwin Bell, 2009. "The Size of Government and U.S.-European Differences in Economic Performance," IMF Working Papers 09/92, International Monetary Fund. [Downloadable!]
  11. Daniela Sonedda & Gilberto Turati, 2005. "Winners and Losers in the Italian Welfare State: A Microsimulation Analysis of Income Redistribution Considering In-Kind Transfers," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(4), pages 423-464, December. [Downloadable!]
  12. Rydell, Ingrid, 2005. "Equity, Justice, Interdependence: Intergenerational Transfers and the Ageing Population," Arbetsrapport 2005:5, Institute for Futures Studies. [Downloadable!]
  13. Marko Köthenbürger & Panu Poutvaara & Paola Profeta, 2005. "Why are More Redistributive Social Security Systems Smaller? A Median Voter Approach," IZA Discussion Papers 1831, Institute for the Study of Labor (IZA). [Downloadable!]
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  14. J. Ignacio Conde-Ruiz & Paola Profeta, 2007. "The Redistributive Design of Social Security Systems," Working Papers 2007-07, FEDEA. [Downloadable!]
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  15. Andras Simonovits, 2009. "When and How to Subsidize Tax-Favored Retirement Accounts?," IEHAS Discussion Papers 0902, Institute of Economics, Hungarian Academy of Sciences. [Downloadable!]
  16. Didier Blanchet & Thierry Debrand, 2008. "The sooner, the better? Analyzing preferences for early retirement in European countries," Working Papers DT13, IRDES institut for research and information in health economics, revised Jul 2008. [Downloadable!]
  17. Boado-Penas, Maria del Carmen / Valdés-Prieto, Salvador / Vidal-Meliá, Carlos, 2008. "The Actuarial Balance Sheet for Pay-As-You-Go Finance: Solvency Indicators for Spain and Sweden," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  18. Queisser, Monika & Whitehouse, Edward & Whiteford, Peter, 2007. "The public–private pension mix in OECD countries," MPRA Paper 10344, University Library of Munich, Germany. [Downloadable!]
  19. Andras Simonovits, 2008. "Underreported Earnings and Old-Age Pension: An Elementary Model," IEHAS Discussion Papers 0805, Institute of Economics, Hungarian Academy of Sciences. [Downloadable!]
  20. Casper Ewisk, 2005. "Reform of Occupational Pensions in the Netherlands," De Economist, Springer, vol. 153(3), pages 331-347, 09. [Downloadable!] (restricted)
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