Is Prescott right? Welfare state policies and the incentives to work, learn and retire.

Autor/in	Jacobs, Bas
Institution	Ifo-Institut für Wirtschaftsforschung
Titel	Is Prescott right? Welfare state policies and the incentives to work, learn and retire. Gefälligkeitsübersetzung: Hat Prescott recht? Wohlfahrtspolitik und Anreize für Erwerbsarbeit, Lernen und Berufsausstieg.
Quelle	München (2008), 33 S.; 408 KB PDF als Volltext kostenfreie Datei Link als defekt meldenVerfügbarkeit
Reihe	Ifo working paper. 2267
Sprache	englisch
Dokumenttyp	online; Monographie; Graue Literatur
Schlagwörter	Bildung; Bildungsverhalten; Bildungsökonomie; Wohlfahrtsökonomie; Lernen; Sozialpolitik; Wohlfahrtsstaat; Anreizsystem; Erwerbstätigkeit; Investition; Steuer; Steuerpolitik; Subventionspolitik; Berufsausstieg; Erwerbsverhalten; Rentenpolitik; Arbeitspapier; Europa
Abstract	"This paper bolsters Prescott's (2004) claim that high taxes are responsible for lacklustre labor market performance in continental European countries. We develop a lifecycle model with endogenous skill formation, endogenous labor supply, and endogenous retirement. Labor taxation distorts not only labor supply, but also education and retirement decisions. Actuarially unfair pensions further exacerbate labor tax distortions on retirement. Education subsidies can nevertheless cushion the adverse impact of taxation on skill formation. Feedbacks between education, labor supply, and retirement are important. The model is simulated with realistic behavioral elasticities that are consistent with microeconometric evidence. If, besides labor supply, also learning and retirement are endogenous, the uncompensated (compensated) elasticity of the tax base equals 0.46 (0.85), which is more than twice as large as the standard uncompensated (compensated) labor supply elasticity of 0.18 (0.40). Furthermore, life-cycle interactions between education, working and retirement are quantitatively important and the interactions raise all behavioral elasticities substantially. For example, the uncompensated labor supply elasticity increases with one-half due to lifecycle interactions (to 0.26). We demonstrate that low European labor supply can be fully explained by taxation without relying on unrealistically high labor supply elasticities. Reducing labor market distortions, cutting benefit levels, lowering tax rates, and making (early) retirement actuarially fairer, therefore boosts labor supply, delays retirement, and stimulates skill formation. In addition, high education subsidies are needed in large welfare states to off-set explicit and implicit tax burdens on human capital investment." Forschungsmethode: Theoriebildung; Grundlagenforschung. (author's abstract, IAB-Doku).
Erfasst von	Institut für Arbeitsmarkt- und Berufsforschung, Nürnberg
Update	2008/4