Coping with rational prodigals:A Theory of Social Security and Savings Subsidies

The rational prodigality argument, which often serves to justify social security,is considered in a second-best tax framework with endogenous labor supply. Rationalprodigality renders the familiar policies time inconsistent. We analyze time consistentpolicies and show that a wage tax suffices to rule out prodigality as a rationalstrategy.[...]

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Year of publication:	2004
Authors:	Homburg, Stefan
Institutions:	Universität <Hannover> / Wirtschaftswissenschaftliche Fakultät
Subject:	Subvention \| Soziale Sicherheit \| Rente \| rent \| Besteuerung \| optimal taxation

Table of Contents
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1. INTRODUCTION
2. THE MODEL
3. A SIMPLE TIME CONSISTENT POLICY
4. LIBERAL SOLUTION: SOCIAL SECURITY
5. LIBERTARIAN SOLUTION: SAVINGS SUBSIDIES
6. CONCLUSION
APPENDIX
REFERENCES

Persistent link: https://ebvufind01.dmz1.zbw.eu/10005867641