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Marital Status and Derived Pension Rights: A Political Economy Model of Public Pensions with Borrowing Constraints
Author(s) -
ONO TETSUO
Publication year - 2016
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12134
Subject(s) - pension , economics , elasticity of substitution , labour economics , wage , wage rate , variable (mathematics) , tax rate , demographic economics , monetary economics , macroeconomics , production (economics) , finance , mathematical analysis , mathematics
This paper develops an overlapping‐generations models featuring four types of households: single female, single male, one‐breadwinner couple, and two‐breadwinner couple. The paper considers majority voting over public pension in the presence of derived pension rights for one‐breadwinner couples. In an economy with a low intertemporal elasticity of substitution, borrowing‐constrained one‐breadwinner couples may prefer a lower tax rate than do other types of households, although the former attain a higher benefit‐to‐cost ratio of public pension than do others. Changes in the gender wage gap, the level of derived pension rights, and the fraction of two‐breadwinner couples produce an inverse U‐shaped relationship between the relevant variable and the tax rate.