Social security privatization with elastic labor supply and second-best taxes
By: Kent Smetters.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11101; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11101.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Social security -- Mathematical models.; Social security -- Finance -- Mathematical models.; Labor supply -- Mathematical models.; Social security taxes -- Mathematical models.; Privatization.; Labor supply -- Mathematical models.
Description: "This paper shows that many common methods of privatizing social security fail to reduce labor market distortions when taxes are second best, challenging a key reason to privatize.  Ironically, providing "transition relief" to workers alive at the time of the reform, in an effort to protect their previous contributions, undercuts potential efficiency gains.  Chile's reform -- the first major privatization that also served as a model for other countries -- actually increased labor market distortions.  It is then shown that privatization with limited transition relief can reduce labor market distortions and produce gains to current and future generations without hurting initial retirees, i.e., a Pareto gain, even with second-best taxes"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 2/17/2005.
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Mode of access: World Wide Web.