When and How to Subsidize Tax-Favored Retirement Accounts?
AbstractWhen and how to subsidize tax-favored pension accounts? To defend myopic workers against themselves, the government introduces a mandatory system but to help savers, it adds taxfavored retirement accounts. If the mandatory system is progressive, then a proportional voluntary system can beneficially dampen the redistribution. If the mandatory system is proportional, then a progressive voluntary system may raise the old-age consumption of the lower-paid. But if both the mandatory and the voluntary systems are proportional and the ceiling is high (as is the case in Hungary), then the latter does not diminish the tension of the mandatory system.
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Bibliographic InfoPaper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 0902.
Length: 28 pages
Date of creation: Jan 2009
Date of revision:
mandatory pensions; tax-favored retirement accounts; voluntary contributions; subsidies;
Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
This paper has been announced in the following NEP Reports:
- NEP-AGE-2009-02-22 (Economics of Ageing)
- NEP-ALL-2009-02-22 (All new papers)
- NEP-LAB-2009-02-22 (Labour Economics)
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