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Optimal Progressivity of Public Pension Benefit and Labor Income Tax

Author

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  • Insook lee

    (Bay Area International Business School, Beijing Normal University)

Abstract

This paper characterizes optimal progressivity of public pension benefit and labor income tax, which leads to intra- and inter-generational redistributions. The optimal progressivity of public pension benefit and that of labor income tax mutually depend on each other. The optimal ratio of public pension benefit progressivity to labor income tax progressivity is not constant rate of time discounting. Optimal public pension benefit is more progressive than optimal labor income tax. Whereas effects of pre-government inequality on the optimal progressivity of public pension benefit and that of labor income tax are positive, effect of population aging on them is theoretically ambiguous.

Suggested Citation

  • Insook lee, 2023. "Optimal Progressivity of Public Pension Benefit and Labor Income Tax," Hacienda Pública Española / Review of Public Economics, IEF, vol. 246(3), pages 3-35, September.
    • Handle: RePEc:hpe:journl:y:2023:v:246:i:3:p:3-35
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    References listed on IDEAS

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    More about this item

    Keywords

    Progressivity of public pension benefit; Progressivity of income tax.;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D60 - Microeconomics - - Welfare Economics - - - General

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