"Incentives and Efficiency of Pension Systems", working paper, July 2017

We study the trade-offs between efficiency and incentive costs of social insurance and redistribution when retirement is endogenous. Constrained-efficient pension systems reward later retirement, surprisingly independent of whether efficient retirement ages increase or decrease with productivity. An equivalence result allows us a straightforward characterization of information-constrained efficiency, including a sufficient statistic. We then estimate individual heterogeneity and the parameters of status-quo policies from U.S. income taxes, Social Security, individual earnings, hours, and retirement ages. Unlike in much of optimal taxation literature, optimal retirement policy is capable of generating not only significant welfare gains but also aggregate output gains.