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Should Old-age Benefits Be Earnings-tested

Author

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  • Määttänen, Niku
  • Poutvaara, Panu

Abstract

We study the welfare effects of earnings testing flat-rate old-age benefits in a quantitative overlapping generations model with idiosyncratic labor income risk. In our model economy, even a moderate earnings testing reduces individualsŽ expected lifetime utility. Moreover, it also lowers the realized lifetime utilities of those at the bottom of the lifetime utility distribution.

Suggested Citation

  • Määttänen, Niku & Poutvaara, Panu, 2006. "Should Old-age Benefits Be Earnings-tested," Discussion Papers 1062, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:1062
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:hapoch:v1_713 is not listed on IDEAS
    2. Tran, Chung & Woodland, Alan, 2014. "Trade-offs in means tested pension design," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 72-93.
    3. repec:eee:joecag:v:7:y:2016:i:c:p:17-29 is not listed on IDEAS
    4. Kudrna, George & Woodland, Alan, 2011. "An inter-temporal general equilibrium analysis of the Australian age pension means test," Journal of Macroeconomics, Elsevier, vol. 33(1), pages 61-79, March.
    5. George Kudrna, 2015. "Means Testing of Public Pensions: The Case of Australia," Working Papers wp338, University of Michigan, Michigan Retirement Research Center.

    More about this item

    Keywords

    social security; retirement; means-testing; computational models;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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