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Saving and taxation in a voluntary pension system: Toward an agent-based model

Author

Listed:
  • Balazs Kiraly

    (Institute of Physics of Budapest University of Technology, Budapest)

  • Andras Simonovits

    (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences also Mathematical Institute of Budapest University of Technology, Budapest)

Abstract

Mandatory pension systems only partially replace old-age income, therefore the government also operates a voluntary pension system, where savings are matched by government grants. Accounting for the resulting tax expenditure, our models describe the income flow from shortsighted to farsighted workers. 1. In rational models, explicit results are obtained, showing the limited learning of shortsighted workers. 2. In agent-based models, this learning is improved and this raises the shortsighted workers' saving and reduces perverse income redistribution.

Suggested Citation

  • Balazs Kiraly & Andras Simonovits, 2016. "Saving and taxation in a voluntary pension system: Toward an agent-based model," CERS-IE WORKING PAPERS 1606, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1606
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    References listed on IDEAS

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    Cited by:

    1. Balázs Király & András Simonovits, 2019. "Learning to save in a voluntary pension system: toward an agent-based model," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(1), pages 121-145, March.

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    More about this item

    Keywords

    life-cycle savings; overlapping generations; mandatory pensions; voluntary pensions; agent-based models;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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