TY - JOUR
T1 - Sustainable social security
T2 - Four options
AU - Kitao, Sagiri
N1 - Publisher Copyright:
© 2013 Elsevier Inc.
PY - 2014/10/1
Y1 - 2014/10/1
N2 - Four options to make the social security sustainable under the coming demographic shift are presented; increase payroll taxes by 6 percentage points, reduce replacement rates by one-third, raise the normal retirement age to 73, or means-test the benefits and reduce them in income. The paper accounts for labor supply at both intensive and extensive margins and analyzes welfare effects across agents that differ in age, wealth and cohorts. While the four policies all achieve the same goal, economic outcomes differ significantly. Options to curtail benefits encourage own savings and capital accumulation, while the payroll tax increase and the means-test reduce work effort. Future generations prefer options to reduce benefits, but current generations prefer to finance the transition with payroll taxes.
AB - Four options to make the social security sustainable under the coming demographic shift are presented; increase payroll taxes by 6 percentage points, reduce replacement rates by one-third, raise the normal retirement age to 73, or means-test the benefits and reduce them in income. The paper accounts for labor supply at both intensive and extensive margins and analyzes welfare effects across agents that differ in age, wealth and cohorts. While the four policies all achieve the same goal, economic outcomes differ significantly. Options to curtail benefits encourage own savings and capital accumulation, while the payroll tax increase and the means-test reduce work effort. Future generations prefer options to reduce benefits, but current generations prefer to finance the transition with payroll taxes.
KW - Demographic shift
KW - Intensive and extensive labor supply margins
KW - Retirement age
KW - Social security reform
KW - Transition dynamics
KW - Welfare analysis
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U2 - 10.1016/j.red.2013.11.004
DO - 10.1016/j.red.2013.11.004
M3 - Article
AN - SCOPUS:84910113649
VL - 17
SP - 756
EP - 779
JO - Review of Economic Dynamics
JF - Review of Economic Dynamics
SN - 1094-2025
IS - 4
ER -