Underreported Earnings and Old-Age Pension: An Elementary Model
This paper analyzes the interconnections of underreported earnings, savings and oldage pension with the help of a most simple, elementary model. The workers can be divided into three groups: 1) well-paid who report their full earnings, 2) well-paid who report only the minimum earnings (evaders) and 3) the poorly paid. We assume that the evaders save a significant part of their hidden earnings for their old age. We compare three pension systems of equal size: (i) the proportional, (ii) the proportional plus basic pension and (iii) the proportional with means testing. Our major result is as follows: if the evaders can be recognized and excluded, then the means-tested system is superior to the basic system.
|Date of creation:||May 2008|
|Contact details of provider:|| Postal: 1112 Budapest, Budaorsi ut 45.|
Phone: (+36-1) 309-2652
Fax: (36-1) 319-3136
Web page: http://econ.core.hu
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:nsr:niesrd:283 is not listed on IDEAS
- Mirco, Tonin, 2006. "The Effects of the Minimum Wage in an Economy with Tax Evasion," Seminar Papers 747, Stockholm University, Institute for International Economic Studies.
- J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Oxford University Press, vol. 38(2), pages 175-208.
- James Sefton & Justin vandeVen & Martin Weale, 2008.
"Means Testing Retirement Benefits: fostering equity or discouraging savings?,"
Royal Economic Society, vol. 118(528), pages 556-590, 04.
- Dr Justin van de Ven & Dr Martin Weale, 2006. "Means Testing Retirement Benefits: fostering equity or discouraging savings?," NIESR Discussion Papers 283, National Institute of Economic and Social Research.
- Clark, Tom & Emmerson, Carl, 2003. "Privatising provision and attacking poverty? The direction of UK Pension Policy under new Labour," Journal of Pension Economics and Finance, Cambridge University Press, vol. 2(01), pages 67-89, March.
- Richard Disney, 2004. "Are contributions to public pension programmes a tax on employment?," Economic Policy, CEPR;CES;MSH, vol. 19(39), pages 267-311, 07.
- Kertesi, Gabor & Köllő, János, 2003. "Fighting “Low Equilibria” by Doubling the Minimum Wage? Hungary’s Experiment," IZA Discussion Papers 970, Institute for the Study of Labor (IZA).
- G??bor Kertei & J??nos K??ll?, 2004. "Fighting ???Low Equilibria??? by Doubling the Minimum Wage ? Hungary???s Experiment," William Davidson Institute Working Papers Series 2004-644, William Davidson Institute at the University of Michigan.
- Feldstein, Martin S, 1987. "Should Social Security Benefits Be Means Tested?," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 468-484, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:has:discpr:0805. 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: (Adrienn Foldi)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.