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Labour Market Responses to the Abolition of Compulsory Superannuation

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  • Louise Carter

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    Abstract

    This paper aims to compare the labour market effects of two alternative retirement income polices: the superannuation guarantee; and the higher income taxes that would be required to fund the greater pension expenditure that would be incurred if the superannuation guarantee was removed. The labour market effects of the superannuation guarantee have already been modelled by Freebairn (1998) by undertaking comparative static analysis of a partial equilibrium model. A similar approach is used to examine the labour market effects of higher taxes. The paper sets out both theoretical models, and then considers a numerical example to compare the policy alternatives. It is concluded that the superannuation guarantee is less distortional than an “equivalent” tax increase as long as workers do not completely discount the future value of future income derived from compulsory superannuation contributions.

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    File URL: http://www.biz.uwa.edu.au/home/research/discussionworking_papers/economics/2005?f=148842
    File Function: First version, 2005
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    Bibliographic Info

    Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 05-18.

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    Length: 11 pages
    Date of creation: 2005
    Date of revision:
    Handle: RePEc:uwa:wpaper:05-18

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    Related research

    Keywords: Aging population; Labour market; Superannuation; Taxation;

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    1. John Freebairn, 2004. "Some Long-Run Labour Market Effects of the Superannuation Guarantee," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(2), pages 191-197, 06.
    2. Freebairn, John, 1998. "Compulsory Superannuation and Labour Market Responses," Australian Economic Papers, Wiley Blackwell, vol. 37(1), pages 58-70, March.
    3. Guest, Ross & McDonald, Ian, 2002. "Superannuation, Population Ageing and Living Standards in Australia," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 32(1), pages 19-33, March.
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    Cited by:
    1. John Freebairn, 2007. "Some Policy Issues in Providing Retirement Incomes," Melbourne Institute Working Paper Series wp2007n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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