In many countries pension systems involve some form of earnings test; i.e., an individual’s benefits are reduced if he has labour income. This paper examines whether or not such earning tests emerge when pension system and income tax are optimally designed. We use a simple model with...

This paper studies the design of retirement and disability policies. It illustrates the often observed exit from the labour force of healthy workers through disability insurance schemes. Two types of individuals, disabled and leisure-prone ones, have the same disutility for labour and cannot be...

This Paper studies the design of pension benefits and contributions when an individual’s health status (disutility of continued activity) is endogenous and depends on consumption of health services. Health services can be subsidized (in a linear or non-linear way, depending on the information...

This Paper studies the design of retirement and disability policies. It illustrates the often observed exit from the labour force of healthy workers through disability insurance schemes. Two types of individuals, disabled and leisure-prone ones, have the same disutility for labour and cannot be...

Abstract We study the design of retirement and disability policies and illustrate the often observed exit from the labor force of healthy workers through disability insurance schemes. In our model, two types of individuals, disabled and leisure-prone ones, have the same disutility for labor and...

We study the design of retirement and disability policies and illustrate the often observed exit from the labor force of healthy workers through disability insurance schemes. In our model, two types of individuals, disabled and leisure-prone ones, have the same disutility for labor and cannot be...

Unemployment insurance (UI) in some countries is one of the most widely used routes to early retirement. Accordingly, firms lay off elderly workers whose wages exceed their productivity. These workers then receive unemployment benefits until they enter formal retirement, even though they have...