References of "Pestieau, Pierre"
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See detailThe Social Protection of the Elderly : Comparison of Two Indicators of Generosity
Lefebvre, Mathieu ULg; Pestieau, Pierre ULg

in Marin, B.; Zaidi, A. (Eds.) Mainstreaming Ageing. Indicators to Monitor Sustainable Policies (2007)

The purpose of this article is to distinguish between two types of generosity of the welfare state towards the elderly. These are: average generosity and generosity towards the poor. We compare these ... [more ▼]

The purpose of this article is to distinguish between two types of generosity of the welfare state towards the elderly. These are: average generosity and generosity towards the poor. We compare these indicators across about 20 countries and show how they relate to each other. In particular, we show that a social protection system that is contributive benefits from a large political support and tends to be generous towards the poor. [less ▲]

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See detailPensions with endogenous and stochastic fertility
Cremer, Helmuth; Gahvari, Firouz; Pestieau, Pierre ULg

in Journal of Public Economics (2006), 90(12), 2303-2321

This paper studies the design of a pay-as-you-go social security system in an overlapping generations model where fertility is in part stochastic and in part determined through capital investment. If ... [more ▼]

This paper studies the design of a pay-as-you-go social security system in an overlapping generations model where fertility is in part stochastic and in part determined through capital investment. If investments are publicly observable, pension benefits must be linked positively to the level of investment, and payroll taxes negatively to the number of children. The outcome is characterized by full insurance with all parents, regardless of their number of children, enjoying identical consumption levels. Without observability, benefits must increase, and payroll taxes decrease, with the number of children. The second-best level of investment, and the resulting average fertility rate, are less than their corresponding first-best levels. (c) 2006 Elsevier B.V. All rights reserved. [less ▲]

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See detailSocial Insurance and Redistribution with Moral Hazard and Adverse Selection
Boadway, Robin; Leite-Monteiro, Manuel; Pestieau, Pierre ULg et al

in Scandinavian Journal of Economics (2006), 108(2), 279-298

Rochet (1991) showed that with distortionary income taxes, social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is re-examined when ex post ... [more ▼]

Rochet (1991) showed that with distortionary income taxes, social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is re-examined when ex post moral hazard and adverse selection are included, and under different informational assumptions. Individuals can take actions influencing the size of the loss in the event of accident (or ill health). Social insurance can be supplemented by private insurance, but private insurance markets are affected by both adverse selection and moral hazard. We study how equity and efficiency considerations should be traded off in choosing the optimal coverage of social insurance when those features are introduced. The case for social insurance is strongest when the government is well informed about household productivity. [less ▲]

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See detailWealth Transfer Taxation: A Survey of the Theoretical Litterature
Cremer, Helmuth; Pestieau, Pierre ULg

in Kolm, Serge-Christophe; Mercier Ythier, Jean (Eds.) Handbook of the Economics of Giving, Altruism and Reciprocity. Volume 2 (2006)

The purpose of this paper is to survey the theoretical literature on wealth transfer taxation. The focus is normative: we are looking at the design of an optimal tax structure from the standpoint of both ... [more ▼]

The purpose of this paper is to survey the theoretical literature on wealth transfer taxation. The focus is normative: we are looking at the design of an optimal tax structure from the standpoint of both equity and efficiency. The gist of this survey is that the optimal design crucially depends on the assumed bequest motives. Alternative bequest motives are thus analyzed either in isolation or combined. Even though there are as many results as models and as many models as combinations of bequest motives, the general conclusion is that the case for a zero taxation of inheritance is very weak. [less ▲]

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See detailPensions with heterogenous individuals and endogenous fertility
Cremer, Helmuth; Gahvari, Firouz; Pestieau, Pierre ULg

in Journal of Population Economics (2006), (21), 961-981

This paper studies the design of pension schemes in a society where fertility is endogenous and parents differ in their ability to raise children. In a world with perfect information, a pay-as-you-go ... [more ▼]

This paper studies the design of pension schemes in a society where fertility is endogenous and parents differ in their ability to raise children. In a world with perfect information, a pay-as-you-go social security system is characterized by equal pensions for all but different contributions which may or may not increase with the number of children. Additionally, fertility must be subsidized at the margin to correct for the externality that accompanies fertility. In a world of asymmetric information, incentiverelated distortions supplement the Pigouvian subsidy. These may either require an additional subsidy or an offsetting tax on fertility depending on whether the redistribution is towards people with more or less children. In the former case, pensions are decreasing in the number of children; in the latter case, they are increasing. [less ▲]

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See detailOptimal accumulation in an endogenous growth setting with human capital
Docquier, Frédéric; Paddison, Olivier; Pestieau, Pierre ULg

in Journal of Economic theory (2006), 134(1), 361-378

This paper considers a three-overlapping-generations model of endogenous growth wherein human capital is the engine of growth. It first contrasts the laissez-faire and the optimal solutions Three possible ... [more ▼]

This paper considers a three-overlapping-generations model of endogenous growth wherein human capital is the engine of growth. It first contrasts the laissez-faire and the optimal solutions Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum. Within the limits of our model, the rationale for the standard pattern of intergenerational transfers (the working-aged financing the education of the young and the pension of the old) is seriously questioned. On pure efficiency grounds, the case for generous public pensions is rather weak. (c) 2006 Elsevier Inc. All rights reserved. [less ▲]

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See detailThe Generosity of the Welfare State Towards the Elderly
Lefebvre, Mathieu ULg; Pestieau, Pierre ULg

in Empirica (2006)

This paper distinguishes among three types of generosity of social security systems: average generosity, generosity towards early retirement and generosity towards the poor. On the basis of theoretical ... [more ▼]

This paper distinguishes among three types of generosity of social security systems: average generosity, generosity towards early retirement and generosity towards the poor. On the basis of theoretical predictions, it examines the statistical correlations among those types of generosity for 14 OECD countries over the period 1985-2000. It also shows how they have evolved over time and tries to relate this evolution to the process of economic integration. There are three main findings, the first one being a positive relation between average social security spending and poverty alleviation. There is the negative relation between average spending and inequality reduction. Finally, over the period 1985-95 one sees that poverty alleviation increases on average, but to a degree that decreases with economic openness. [less ▲]

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See detailLitterature review on the redistributive effects of pension systems
Grammenos, S.; Lefèbvre, Mathieu; Pestieau, Pierre ULg et al

Report (2006)

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See detailOptimal income taxation and the ability distribution: Implications for migration equilibria
Hamilton, J.; Pestieau, Pierre ULg

in International Tax and Public Finance (2005), 12(1), 29-45

As recently argued by Diamond (1998), one of the key factors explaining the progressivity of an optimal non-linear income tax is the distribution of productivity among workers. Migration is one source of ... [more ▼]

As recently argued by Diamond (1998), one of the key factors explaining the progressivity of an optimal non-linear income tax is the distribution of productivity among workers. Migration is one source of changes in the productivity distribution. How changes in the population's ability distribution affect optimal income tax schedules has received little attention. Changing the distribution generally affects both the objective function and the government budget constraint. We first consider the comparative statics of the fraction of highly-skilled workers with maximin and maximax welfare functions (so that only the second effect is present) and a quasi-linear utility function. We also present some results for a utilitarian social welfare function. We then study the interaction between mobility and redistributive taxation. We consider mobility by either the skilled or unskilled population under majority voting where governments take the population as fixed. If individuals choose to relocate independently, having identical ability distributions is always a stable equilibrium when the unskilled are the mobile group. However, this is not always the case when the skilled are mobile. If groups of individuals can choose where to locate, having identical ability distributions across regions is only an equilibrium when the mobile type has an overall majority. [less ▲]

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See detailVoting on pensions with endogenous retirement age
Casamatta, G.; Cremer, H.; Pestieau, Pierre ULg

in International Tax and Public Finance (2005), 12(1), 7-28

It is often argued that the observed trend towards early retirement is due mainly to the implicit tax imposed on continued activity of elderly workers. We study the relevance of such a distortion in a ... [more ▼]

It is often argued that the observed trend towards early retirement is due mainly to the implicit tax imposed on continued activity of elderly workers. We study the relevance of such a distortion in a political economy model with endogenous age of retirement. The setting is a two-period overlapping generations model. Individuals differ in their productivity. In the first period they work a fixed amount of time; in the second, they choose when to retire and then receive a flat rate pension benefit. Pensions are financed by a payroll tax on earnings in the first and in the second period of life. Such a tax is non distortionary in the first period; it is distortionary in the second period. We allow for some rebating of the second period tax. Individuals vote on the level of the payroll tax given the rebate which can range from 0 (biased system) to 100% (neutral system). We provide sufficient conditions for the existence of a voting equilibrium and study its properties. Under these conditions, high tax rates are supported by all the old and by low productivity young individuals. We show that the pivotal voter is a young individual. The number of young individuals who have higher wage than the pivotal voter equals half the total population. We also show that the introduction of a bias increases the political support for the pension system. Finally, we study the simultaneous determination of the bias and the tax rate through a voting procedure and show that the equilibrium (if any) implies a bias which is always positive and may or not be larger than one. [less ▲]

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See detailPourquoi SHARE?
Perelman, Sergio ULg; Pestieau, Pierre ULg

in Les Finances publiques: Défis à moyen et long termes (2005)

SHARE, l’acronyme de Survey on Health, Ageing and Retirement in Europe, est sans nul doute une des plus grandes enquêtes jamais réalisées au niveau européen. Elle s'adresse à la population de 50 ans et ... [more ▼]

SHARE, l’acronyme de Survey on Health, Ageing and Retirement in Europe, est sans nul doute une des plus grandes enquêtes jamais réalisées au niveau européen. Elle s'adresse à la population de 50 ans et plus, et a l'originalité d'être internationale, multidisciplinaire et longitudinale. Ces caractéristiques font de SHARE l'instrument indispensable pour mieux comprendre la réalité du vieillissement, ses implications sociales et économiques. Il devrait à terme permettre développer des politiques économiques à la fois plus efficaces et équitables tant à l’échelon national qu’européen. [less ▲]

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See detailLong-term care insurance and optimal taxation for altruistic children
Jousten, Alain ULg; Lipszyc, B.; Marchand, Maurice et al

in Finanzarchiv (2005), 61(1), 1-18

We model long-term care insurance in an optimal taxation framework. Every adult decides upon the amount and type of care he purchases for his dependent parent. We consider two alternatives: nursing-home ... [more ▼]

We model long-term care insurance in an optimal taxation framework. Every adult decides upon the amount and type of care he purchases for his dependent parent. We consider two alternatives: nursing-home care provided by the government, and home care paid by the child with some lump-sum subsidy by the government. The only source of information asymmetry is the government's inability to observe the degree of altruism of the adult child for his/her parent. Further tax collection entails some social costs. In such a second-best setting, we show that the quality of institutional care has to be kept relatively low and that compared to altruistic children, nonaltruistic ones enjoy a high level of consumption. [less ▲]

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See detailRaising the age of retirement: an example of political ratchet effect
Lefebvre, Mathieu ULg; Pestieau, Pierre ULg; Vidal, Jean-Pierre et al

Report (2005)

Political resistance to a progressive increase in the retirement age is widespread in a number of European countries. We present a simple model explaining why such a reform can be opposed even when it is ... [more ▼]

Political resistance to a progressive increase in the retirement age is widespread in a number of European countries. We present a simple model explaining why such a reform can be opposed even when it is profitable to a majority of citizens. Then, we try to explain the existence of wide differences in the average length of retirement across countries and over time. [less ▲]

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See detailSocial Security in Belgium: Distributive Outcomes
Jousten, Alain ULg; Lefebvre, Mathieu ULg; Pestieau, Pierre ULg et al

Report (2005)

The paper analyzes the link between old-age income programs and economic outcomes in Belgium. We use a simulation methodology to construct an average pension generosity variable. Our regression analysis ... [more ▼]

The paper analyzes the link between old-age income programs and economic outcomes in Belgium. We use a simulation methodology to construct an average pension generosity variable. Our regression analysis explores the link with distributional outcomes in income, consumption and more subjective indicators. Results document the weak link between average generosity and distributional outcomes across a heterogeneous population. [less ▲]

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See detailFaut-il un ou plusieurs indicateurs d'exclusion sociale?
Lefebvre, Mathieu ULg; Perelman, Sergio ULg; Pestieau, Pierre ULg

in Revue Belge de Sécurité Sociale (2005), (1), 59-76

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See detailSocial security, retirement age and optimal income taxation
Cremer, H.; Lozachmeur, J. M.; Pestieau, Pierre ULg

in Journal of Public Economics (2004), 88(11), 2259-2281

It is often argued that implicit taxation on continued activity of elderly workers is responsible for the widely observed trend towards early retirement. In a world of laissez-faire or of first-best ... [more ▼]

It is often argued that implicit taxation on continued activity of elderly workers is responsible for the widely observed trend towards early retirement. In a world of laissez-faire or of first-best efficiency, there would be no such implicit taxation. The point of this paper is that, when first-best redistributive instruments are not available, because some variables are not observable, the optimal policy does imply a distortion of the retirement decision. Consequently, the inducement of early retirement may be part of the optimal tax-transfer policy. We consider a model in which individuals differ in their productivity and their capacity to work long and choose both their weekly labor supply and their age of retirement. We characterize the optimal non-linear tax-transfer that maximizes a utilitarian welfare function when weekly earnings and the length of active life are observable while individuals' productivity and health status are not observable. (C) 2003 Elsevier B.V. All rights reserved. [less ▲]

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See detailFiscal policy in an ovrelapping generations model with bequest-as-consumption
Michel, Philippe; Pestieau, Pierre ULg

in Journal of Public Economic Theory (2004)

This paper analyzes an overlapping generation (OLG) growth model wherein saving finances second period consumption and bequest-as-consumption. First, it looks at the market equilibrium and at the optimal ... [more ▼]

This paper analyzes an overlapping generation (OLG) growth model wherein saving finances second period consumption and bequest-as-consumption. First, it looks at the market equilibrium and at the optimal solution; then it turns to the issue of decentralizing the optimal solution with various taxes and transfers. Depending on the available instruments, either a first-best or a second-best optimum can be achieved. Throughout the paper, the results are contrasted with those obtained in the standard OLG model without intergenerationel transfers. [less ▲]

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See detailFactor Mobility and Redistribution
Cremer, Helmuth; Pestieau, Pierre ULg

in Henderson, J. V.; Thisse, J. F. (Eds.) Handbook of Regional and Urban Economics. Volume 4 (2004)

This chapter reviews recent theoretical work on the effect of factor mobility and the ensuing tax competition on the capacity of governments to raise revenue and redistribute income. It focuses on three ... [more ▼]

This chapter reviews recent theoretical work on the effect of factor mobility and the ensuing tax competition on the capacity of governments to raise revenue and redistribute income. It focuses on three issues: the relevance and limitations of the "race to the bottom" result, the benefits and pitfalls of partial coordination and the incidence of factors mobility on social security systems. [less ▲]

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See detailCapital income taxation when inherited wealth is not observable
Cremer, H.; Pestieau, Pierre ULg; Rochet, J. C.

in Journal of Public Economics (2003), 87(11), 2475-2490

This paper extends the Atkinson-Stiglitz model of direct and indirect taxation to a dynamic setting with two unobservable characteristics: productive ability and inherited wealth. Bequests are motivated ... [more ▼]

This paper extends the Atkinson-Stiglitz model of direct and indirect taxation to a dynamic setting with two unobservable characteristics: productive ability and inherited wealth. Bequests are motivated by the 'joy of giving'. A child's inheritance is a random variable with a probability distribution that depends on his parent's investment in a 'bequest technology'. Public borrowing is assumed and implies the modified golden rule. We study the optimal tax policy when two instruments are available: a non-linear (wage) income tax and a proportional tax on capital income. We show that the second instrument ought, in general, to be used but that the tax rate is not necessarily positive. However, a positive tax rate is more likely when there is a positive correlation between inherited wealth and innate ability. (C) 2002 Elsevier B.V. All rights reserved. [less ▲]

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See detailThe double dividend of postponing retirement
Cremer, H.; Pestieau, Pierre ULg

in International Tax and Public Finance (2003), 10(4), 419-434

Early retirement seems to plague social security systems in a number of European countries. In this paper we argue that delaying retirement may have two positive effects: it is likely to partially restore ... [more ▼]

Early retirement seems to plague social security systems in a number of European countries. In this paper we argue that delaying retirement may have two positive effects: it is likely to partially restore the financial balance of the system, and it may foster redistribution among retirees. To obtain such a double dividend, the benefit rule of the initial social security scheme must have the following two characteristics. First, it operates redistribution within generations. Second, it is "biased" and induces early retirement. [less ▲]

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