This paper is one of the nicest experience to present: the audiences find always something really interesting to comment on. We were matched in a lovely session with Raphael ABIRY and Natacha RAFFIN, with great interventions from other participants. We were also very excited by wonderful keynotes of Helmuth CREMER, Edward SCHLEE and Hulya ERASLAN.  All in all, the Social Security session at APET this year was pure milk & honey.

We study interactions between progressive labor taxation and social security reform. Increasing longevity puts fiscal strain that necessitates the social security reform. The current social security is redistributive, thus providing (at least partial) insurance against idiosyncratic income shocks, but at the expense of labor supply distortions. A reform which links pensions to individual incomes reduces distortions associated with social security contributions, but incurs insurance loss. We show that the progressive labor tax can partially substitute for the redistribution in social security, thus reducing the insurance loss.