Working Paper: NBER ID: w11877
Authors: Peter A. Diamond
Abstract: After presenting the Gruber-Wise analysis showing a strong effect on retirement of implicit taxes from pension rules, it is shown that there is no effect of these implicit taxes on unemployment. This supports the argument for avoiding high implicit taxes on continued work. Also discussed are methods for adjusting benefits and taxes for increases in life expectancy, with particular attention to increasing "the retirement age." Calculations are presented showing the decreases in benefits for an increase in the normal retirement age in the US and the years of service for a full benefit in France.
Keywords: pensions; retirement; implicit taxes; life expectancy; labor force participation
JEL Codes: H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unemployment rates (J64) | high implicit taxes (H29) |
| implicit taxes (H29) | earlier retirement (J26) |
| tax force (H26) | unused productive capacity (D24) |
| high implicit taxes (H29) | lower labor force participation (J49) |
| high implicit taxes (H29) | unemployment rates (J64) |