Habit formation and labor supply
This paper shows that the combination of habit formation - present consumption creating additional consumption needs in the future - and myopia may explain why some retirees are forced to "unretire", i.e., unexpectedly return to work. It also shows that when myopia about habit formation le...
Gespeichert in:
Weitere Verfasser: | |
---|---|
Format: | UnknownFormat |
Sprache: | eng |
Veröffentlicht: |
Munich
Univ., Center for Economic Studies u.a.
2008
|
Schriftenreihe: | CESifo working paper series Public finance
2351 |
Schlagworte: | |
Tags: |
Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
|
Zusammenfassung: | This paper shows that the combination of habit formation - present consumption creating additional consumption needs in the future - and myopia may explain why some retirees are forced to "unretire", i.e., unexpectedly return to work. It also shows that when myopia about habit formation leads to unretirement there is a case for government's intervention. In a first-best setting the optimal solution can be decentralized by a simple "Pigouvian" (paternalistic) consumption tax (along with suitable lump-sum taxes). In a second-best setting, when personalized lump-sum transfers are not available, consumption taxes may have conflicting paternalistic and redistributive effects. We study the design of consumption taxes in such a setting when myopic individuals differ in productivity. |
---|---|
Beschreibung: | Literaturverz. S. 14 |
Beschreibung: | 14 S. |