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Women's Labor Supply Incentives and Old-Age Income Redistribution

Author

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  • Kindermann, Fabian
  • Pueschel, Veronika

Abstract

The risk of ending up poor in old age is shaped at young ages and it is concentrated among women. To counteract old-age poverty, many countries redistribute income through the pension system on a lifetime-earnings basis. Using a quantitative model, we argue that a pension system that uses annual instead of lifetime earnings as basis for redistribution leads to much better labor market outcomes and a superior old-age income distribution. Such a system comes with broad employment incentives, especially for individuals prone to old-age poverty risk. As such, it addresses the causes of old-age poverty and not only its consequences.

Suggested Citation

  • Kindermann, Fabian & Pueschel, Veronika, 2024. "Women's Labor Supply Incentives and Old-Age Income Redistribution," CEPR Discussion Papers 18895, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18895
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    File URL: https://cepr.org/publications/DP18895
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    Keywords

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    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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