Abstract
In many countries elderly workers are subject to a double distortion when they consider prolonging their activity: the payroll tax and a reduction in their pension rights. It is often argued that such a double burden would not be socially desirable. We consider a setting where it would be rejected by both a utilitarian and a Rawlsian social planner. Furthermore, each individual would also reject it as a citizen candidate. We show that the double burden may nevertheless be (second-best) Pareto efficient and can be supported by a particular structure of social weights biased towards the more productive workers.
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Casamatta, G., Cremer, H. & Pestieau, P. Is there a Political Support for the Double Burden on Prolonged Activity?. Economics of Governance 7, 143–154 (2006). https://doi.org/10.1007/s10101-005-0001-9
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DOI: https://doi.org/10.1007/s10101-005-0001-9