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The growth effects of capital income tax-funded pension program under endogenous retirement

Author

Listed:
  • Yaqi Wang

    (Nagoya University)

Abstract

This study aims to clarify the effects of capital income tax-funded pension reform on economic growth under endogenous retirement choice. By employing a two-period overlapping-generations (OLG) model with endogenous growth, the present study examines the effects of capital income tax on endogenous retirement and economic growth. When retirement decisions are endogenous, capital income tax affects economic growth through two opposing effects: a negative effect by lowering savings and a positive effect by decreasing the elderly labor supply. If elderly labor productivity is relatively low and within a certain range, an inverted U-shaped relationship between capital income tax and economic growth may exist.

Suggested Citation

  • Yaqi Wang, 2025. "The growth effects of capital income tax-funded pension program under endogenous retirement," Economics Bulletin, AccessEcon, vol. 45(4), pages 2120-2128.
    • Handle: RePEc:ebl:ecbull:eb-26-00025
    as

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    References listed on IDEAS

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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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