This paper explores the labor supply effects of a large-scale policy change in the Austrian disability insurance program, which tightened eligibility criteria for men above a certain age. Using administrative data on the universe of Austrian private-sector employees, the results of...

This paper presents new evidence on how the annuitization decision is affected by changes in the annuity’s value. We take advantage of an unprecedented change in policy in a number of Swiss occupational pension plans: The 20 percent reduction in the rate at which retirement capital is...

The paper compares the impact of corporate taxation and social insurance on foreign direct investment (FDI) and unemployment. Four main results are derived: (i) the optimal size of the welfare state depends on the degree of risk-aversion and the unemployment rate as a measure of labor income...

In comparing the impact of corporate taxation and social insurance on foreign direct investment (FDI) and unemployment, the paper derives four main results: (i) the optimal size of the welfare state depends on the degree of risk-aversion, the unemployment rate and the excess burden of labor...

Child-care subsidies are meant to facilitate work for mothers with small children. The paper demonstrates that the predominant current subsidy scheme in Switzerland, which ties the subsidies to realized income (but not to potential income), creates strongly negative work incentives especially...

This paper investigates the consequences of pension reform for life-cycle unemployment and retirement. We find that (i) improving actuarial fairness in pension assessment not only boosts old age participation but also reduces unemployment among prime age workers and raises welfare; (ii)...

A social market economy, together with corrective government activities, allows citizens to achieve the highest possible welfare with limited resources. Income and welfare, however, tend to be very unequally distributed in society. Most theories of justice call for some redistribution for a more...

Previous empirical literature has shown a substantial extent of work disincentives in the Disability Insurance (DI). While its focus has been on the inflow into DI and on increases in benefits, this study focuses on a partial benefit cut and on existing beneficiaries. The partial benefit...

Disability insurance (DI) beneficiaries lose some of their benefits if their earnings exceed certain thresholds (“cash-cliffs”). When this reduction is too high, this implicit taxation of earnings is considered to be one of the prime reasons for the low outflow from DI. This paper analyzes a...

This paper investigates the dynamic consequences of demographic change and various pension reform scenarios for Austria. The analysis is based on a computable overlapping generations model with life-cycle labor supply, savings, and search unemployment. The public sector is decomposed into...