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- Title
Optimal Design of Means Tested Retirement Benefits.
- Authors
Sefton, James; van de Ven, Justin
- Abstract
Design of welfare benefits is a tricky business. In this regard, James Meade believed that it is important to avoid excessive distortions to the price of labour. He also recognised that means testing is a useful way of limiting the ‘hideously expensive’ cost of universal benefits provision; he conjectured that a 50% claw-back rate might be appropriate. We use a rational agent model to explore the welfare effects of alternative retirement benefits arrangements in the UK. Our analysis supports an extensive role for means testing, consistent with Meade's conjecture, and highlights the distortions associated with alternative methods of benefits financing.
- Subjects
UNITED Kingdom; BRITISH social policy; MEADE, J. E. (James Edward), 1907-1995; ECONOMETRIC models of taxation; ECONOMIC models; BENEFIT theory of taxation; ECONOMIC statistics; PUBLIC welfare; PUBLIC welfare laws; BRITISH economic policy -- 1945-1964; BRITISH politics &; government; TWENTIETH century
- Publication
Economic Journal, 2009, Vol 119, Issue 541, pF461
- ISSN
0013-0133
- Publication type
Article
- DOI
10.1111/j.1468-0297.2009.02316.x