Compulsory savings in the welfare state

  title={Compulsory savings in the welfare state},
  author={Stefan Homburg},
  journal={Journal of Public Economics},
  • Stefan Homburg
  • Published 2000
  • Economics
  • Journal of Public Economics
  • According to a widely held belief, compulsory savings are justified on efficiency grounds because they alleviate the following free rider problem: if the welfare state grants a minimum income to older persons, some of the young may find it optimal not to provide for retirement. The literature argues that compulsory savings can be used in order to overcome this problem. However, potential free riders consider compulsory savings as if they were payroll taxes; this holds even if the pension system… CONTINUE READING

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