Harsh occupations, life expectancy and social security
AbstractShould special pension provisions be offered to workers in harsh occupations? We address this question in an optimal tax setting where individuals differ in longevity and occupation. Longevity is private information but workers in harsh occupations have on average shorter lifes than workers in safe occupations. We adopt a weighted utilitarian social objective to partially redress the implicit redistribution from short- to long-lived individuals that the unweighted utilitarian objective entails. We show that there is a case for differentiating the social security policy by occupation. We also show that short-lived workers are induced to overconsume when young and to retire early in order to prevent mimicking by long-lived ones. This is achieved by taxing, often quite heavily, the savings and the earnings from prolonging activity of short-lived individuals.
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Bibliographic InfoPaper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 678.
Date of creation: Jan 2013
Date of revision:
longevity; retirement; harsh occcupations; tagging;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
- NEP-AGE-2013-02-16 (Economics of Ageing)
- NEP-ALL-2013-02-16 (All new papers)
- NEP-CTA-2013-02-16 (Contract Theory & Applications)
- NEP-HEA-2013-02-16 (Health Economics)
- NEP-LAB-2013-02-16 (Labour Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Should firemen and police officers retire earlier?
by Economic Logician in Economic Logic on 2013-03-04 16:08:00
- Pierre Pestieau & Gregory Ponthiere, 2012.
"The Public Economics of Increasing Longevity,"
Hacienda Pública Española,
IEF, vol. 200(1), pages 41-74, March.
- PESTIEAU, Pierre & PONTHIERE, Grégory, . "The public economics of increasing longevity," CORE Discussion Papers RP -2464, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- PESTIEAU, Pierre & PONTHIERE, Grégory, 2012. "The public economics of increasing longevity," CORE Discussion Papers 2012005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Pierre Pestieau & Grégory Ponthière, 2012. "The public economics of increasing longevity," PSE Working Papers halshs-00676492, HAL.
- repec:hal:wpaper:halshs-00676492 is not listed on IDEAS
- Pierre Pestieau & Grégory Ponthiere, 2012. "On the Policy Implications of Changing Longevity," CESifo Working Paper Series 3926, CESifo Group Munich.
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