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- Title
Payroll-Tax Financed Social Insurance with Variable Retirement.
- Authors
Diamond, Peter A.; Mirrlees, James A.
- Abstract
The optimal relationship between retirement benefits and retirement age is derived. The model assumes ex ante identical workers, zero-one labor supply, no private savings, wages and payroll taxes constant over life, random onset of an inability to work, and the impossibility of distinguishing those unable to work from those choosing retirement. This formulation is meant to capture some issues for retirement programs where governments commonly do not measure disability, e.g., ages 65-70. With intertemporally additive preferences, optimal benefits rise with the age of retirement, but more slowly than would be actuarially fair. A nonadditive example is also considered.
- Subjects
RETIREMENT benefits; RETIREMENT age
- Publication
Scandinavian Journal of Economics, 1986, Vol 88, Issue 1, p25
- ISSN
0347-0520
- Publication type
Article
- DOI
10.2307/3440271