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Title: Is There a Political Support for the Double Burden on Prolonged Activity?

Author(s): Georges Casamatta, Helmuth Cremer and Pierre Pestieau

Publication Date: October 2004

Keyword(s): implicit taxation, pensions and retirement age

Programme Area(s): Public Economics

Abstract: In many countries elderly workers are subject to a double distortion when they consider prolonging their activity: the payroll tax and a reduction in their pension rights. It is often argued that such a double burden would not be socially desirable. We consider a setting where it would be rejected by both a utilitarian and a Rawlsian social planner. Furthermore, each individual would also reject it as a citizen candidate. We show that the double burden may nevertheless be (second-best) Pareto efficient and can be supported by a particular structure of social weights biased towards the more productive workers.

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Bibliographic Reference

Casamatta, G, Cremer, H and Pestieau, P. 2004. 'Is There a Political Support for the Double Burden on Prolonged Activity?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4706