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
- 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.
- 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.
- 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.
- 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.
- James Sefton & Justin vandeVen & Martin Weale, 2008. "Means Testing Retirement Benefits: fostering equity or discouraging savings?," Economic Journal, Royal Economic Society, vol. 118(528), pages 556-590, 04.
- 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.
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 references are entirely missing, you can add them using this form.