Vortrag
Inequality and Defined Benefit Pensions When Life Expectancy Is Heterogeneous

Daniel Kemptner, Peter Haan, Victoria Prowse

Taxation in a Global Economy : 71st Annual Conference of the International Institute of Public Finance (IIPF 2015)
Dublin, Irland, 20.08.2015 - 23.08.2015

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Abstract:
In this paper, we analyze how income taxes, transfer programs and the pension system affect inequality in lifetime income. Importantly, we consider pre-retirement and post-retirement income and thereby we extend the previous literature on lifetime inequality, which has only considered income received before retirement. We use a dynamic structural life-cycle model to derive trajectories of earnings and net income over the whole life-cycle. Based on these life-cycle profiles, we investigate the drivers of inequality in lifetime gross earnings and we study the impact of taxes, transfer and pensions on inequality in lifetime net income. We also use the estimated model to analyze the how pension reforms affect inequality in lifetime income.