Journal Article

Are contributions to public pension programmes a tax on employment?

Richard Disney

in Economic Policy

Published on behalf of Center for Economic Studies of the University of Munich

Volume 19, issue 39, pages 268-311
Published in print July 2004 | ISSN: 0266-4658
Published online August 2014 | e-ISSN: 1468-0327 | DOI: https://dx.doi.org/10.1111/j.1468-0327.2004.00124.x
Are contributions to public pension programmes a tax on employment?

More Like This

Show all results sharing these subjects:

  • Economic Growth and Aggregate Productivity
  • Financial Regulation
  • Health, Education, and Welfare
  • Labour and Demographic Economics
  • Macroeconomics and Monetary Economics
  • Public Economics
  • Regional Government Analysis

GO

Show Summary Details

Preview

Many studies describe the potentially adverse impact on employment of the payroll costs of financing public pension programmes. Conventionally, empirical studies treat contributions to public pension programmes as a pure tax (in, for example, calculations of the tax wedge by OECD). But this approach ignores any future rights to benefits that are perceived by contributors. In fact, public pension programmes contain both an ‘actuarial’ and a ‘redistributive’ component – the former closer to saving, the latter a tax. The paper constructs indicators of the tax component of pension programmes, both between and within generations, across a range of OECD countries and time periods. It uses these measures in a cross-country panel analysis of the determinants of age and gender-specific economic activity rates. The results reveal robust evidence that when public pension programme contributions are broken down into a tax component and a savings component, the tax component of the payroll contribution reduces economic activity rates among women while a higher retirement saving component has the opposite effect. There is little evidence that average tax rates, however constructed, have any adverse impact on the economic activity rates of men.

— Richard Disney

Journal Article.  17444 words.  Illustrated.

Subjects: Economic Growth and Aggregate Productivity ; Financial Regulation ; Health, Education, and Welfare ; Labour and Demographic Economics ; Macroeconomics and Monetary Economics ; Public Economics ; Regional Government Analysis

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content. subscribe or login to access all content.