IDEAS home Printed from https://ideas.repec.org/a/bla/manch2/v62y1994i2p167-83.html
   My bibliography  Save this article

Two-Tier State Pensions: Labour Supply and Income Distribution

Author

Listed:
  • Creedy, John

Abstract

This paper compares state pensions using a two-period model which allows for labor supply responses. A two-tier pension gives rise to a nonconvex budget constraint facing individuals, giving rise to a range of labor supply responses. The paper uses a social welfare function to consider the trade-off between average utility and inequality. The trade-off displays a backward bending section whereby, above a certain tax rate, further increases in tax reduce average utility and increase inequality. A major result is that, in terms of the trade-off between equity and efficiency, the flat-rate pension dominates the two-tier pension. Hence a higher social indifference curve can always be reached using a flat-rate pension. Copyright 1994 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Creedy, John, 1994. "Two-Tier State Pensions: Labour Supply and Income Distribution," The Manchester School of Economic & Social Studies, University of Manchester, vol. 62(2), pages 167-183, June.
  • Handle: RePEc:bla:manch2:v:62:y:1994:i:2:p:167-83
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Corsini, Lorenzo & Spataro, Luca, 2011. "Optimal decisions on pension plans in the presence of financial literacy costs and income inequalities," MPRA Paper 30946, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:manch2:v:62:y:1994:i:2:p:167-83. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/semanuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.