Coping with Rational Prodigals
A Theory of Social Security and Savings Subsidies
Bibliographic Data
| ID | 9722364 |
|---|---|
| Authors | STEFAN HOMBURG (0000-0001-7308-2690, Leibniz University Hannover, corresponding author) |
| Year | 2006 |
| Volume | 73 |
| Issue | 289 |
| Pages | 47-58 |
| Publication date | 2006-02-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/j.1468-0335.2006.00447.x |
| OpenAlex | W2003492721 |
| Language | EN |
| Citations received | 1 |
| References cited | 5 |
The rational prodigality argument, which often serves to justify social security, is considered in a second‐best tax framework with endogenous labour supply. Rational prodigality renders the familiar policies time‐inconsistent. I analyse time‐consistent policies and show that a wage tax suffices to rule out prodigality as a rational strategy. However, by using savings subsidies the solution can be improved upon. The subsidies are shown to be decreasing in income. A social security system with increasing contributions is not needed in either case
Argument (complex analysis) · Coping (psychology) · Economics · Labour economics · Macroeconomics · Market economy · Microeconomics · Political science · Public economics · Rational expectations · Rationality · Social security · Subsidy · Wage · Financial Literacy, Pension, Retirement Analysis · Fiscal Policy and Economic Growth · Taxation and Compliance Studies
| Citations per year | 0.06 |
|---|---|
| Citation span | 2010 - 2010 (1) |
| Highly cited | No |