Working paper no. 19/2007


Pension systems from a tax/labour market perspective

Most empirical work tends to treat public pensions outlays as being irrelevant in the context of defining marginal incentives to work. This tradition is likely to misrepresent both levels and in particular crosscountry variations in effective marginal tax rates. First, public pensions systems within the OECD areas have vastly different levels of ambitions in terms of providing mandatory high replacement rates as well as the redistribution within the pension system. In some countries, higher earnings in working life provide a substantially higher public pension in retirement age while in other countries zero additional pension rights are being accrued. This working paper discusses some of the issues relevant when designing public pension systems seen from a labour market and cross-country perspective.

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Author: Helge Sigurd Næss-Schmidt