Abstract
Support for the two-tier approach to income maintenance for the aged is becoming widespread. Two-tier formulas combine an income-conditioned bottom tier with an earnings-related top tier to achieve antipoverty and earnings replacement objectives. This paper first refutes the claim that the two-tier approach is generally more target-efficient in reaching the poor than is the earnings-related top tier with progressive replacement rates. Next, the paper compares the effectiveness of the two systems in terms of other goals. The paper concludes by showing that a top tier with a low tax on current income can virtually dominate a wide range of two-tier formulas.
| Original language | English |
|---|---|
| Pages (from-to) | 159-177 |
| Number of pages | 19 |
| Journal | Journal of Public Economics |
| Volume | 11 |
| Issue number | 2 |
| DOIs | |
| State | Published - Mar 1979 |
