A Simple Model of Tax-Favored Retirement Accounts
To defend myopic workers against themselves, the government introduces a mandatory system but to help savers, it adds tax-favored retirement accounts. In a very simple model, where benefits are proportional to contributions, we compare three extreme systems: (i) the pure mandatory system, (ii) the asymmetric system, where only the savers participate in the voluntary system, (iii) the symmetric system, where both types participate proportionally to their wages. The symmetric voluntary system is welfare-superior to the asymmetric one as well as to the pure mandatory system, which in turn are equivalent to each other.
|Date of creation:||Aug 2009|
|Date of revision:|
|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
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.:
- Saez, Emmanuel, 2007.
"Details Matter: The Impact of Presentation and Information on the Take-up of Financial Incentives for Retirement Saving,"
CEPR Discussion Papers
6386, C.E.P.R. Discussion Papers.
- Emmanuel Saez, 2009. "Details Matter: The Impact of Presentation and Information on the Take-Up of Financial Incentives for Retirement Saving," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 204-28, February.
- Stefan Homburg, 2006.
"Coping with Rational Prodigals: A Theory of Social Security and Savings Subsidies,"
London School of Economics and Political Science, vol. 73(289), pages 47-58, 02.
- Homburg, Stefan, 2004. "Coping With Rational Prodigals: A Theory Of Social Security And Savings Subsidies," Hannover Economic Papers (HEP) dp-293, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
- Laibson, David, 1998. "Life-cycle consumption and hyperbolic discount functions," European Economic Review, Elsevier, vol. 42(3-5), pages 861-871, May.
- Hans Fehr & Christian Habermann & Fabian Kindermann, 2006.
"Tax-Favored Retirement Accounts: Are they Efficient in Increasing Savings and Growth?,"
012, Bavarian Graduate Program in Economics (BGPE).
- Hans Fehr & Christian Habermann & Fabian Kindermann, 2008. "Tax-Favored Retirement Accounts: Are they Efficient in Increasing Savings and Growth?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(2), pages 171-198, June.
- R. Glenn Hubbard & Jonathan S. Skinner, 1996. "Assessing the Effectiveness of Saving Incentives," Books, American Enterprise Institute, number 53540, October.
- James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
- Börsch-Supan, Axel & Reil-Held, Anette & Schunk, Daniel, 2008. "Saving incentives, old-age provision and displacement effects: evidence from the recent German pension reform," Journal of Pension Economics and Finance, Cambridge University Press, vol. 7(03), pages 295-319, November.
- Martin Neil Baily & Jacob Funk Kirkegaard, 2009. "US Pension Reform: Lessons from Other Countries," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4259, January.
- Diamond, Peter & Koszegi, Botond, 2003. "Quasi-hyperbolic discounting and retirement," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1839-1872, September.
- Eric M. Engen & William G. Gale & John Karl Scholz, 1996. "The Illusory Effects of Saving Incentives on Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 113-138, Fall.
- Feldstein, Martin S, 1987. "Should Social Security Benefits Be Means Tested?," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 468-84, June.
- Imrohoroglu, Ayse & Imrohoroglu, Selahattin & Joines, Douglas H, 1998. "The Effect of Tax-Favored Retirement Accounts on Capital Accumulation," American Economic Review, American Economic Association, vol. 88(4), pages 749-68, September.
- R. Glenn Hubbard & Jonathan S. Skinner, 1996.
"Assessing the Effectiveness of Saving Incentives,"
Journal of Economic Perspectives,
American Economic Association, vol. 10(4), pages 73-90, Fall.
- 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, 1987. "Should Social Security Benefits Be Means Tested?," Scholarly Articles 2770498, Harvard University Department of Economics.
- Love, David A., 2007. "What can the life-cycle model tell us about 401(k) contributions and participation?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 6(02), pages 147-185, July.
When requesting a correction, please mention this item's handle: RePEc:has:discpr:0915. 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.