A Simple Model Referring Evasion Case in Albanian Pension System
This study deals with the relationship between underreported earnings, savings and old-age pension. The presented model is taken from the paper “Underreported Earnings and Old-Age Pension System: An Elementary System” of Hungarian Academy of Science and is applied to the Albanian data. Three pension systems have been compared: 1- the proportional, 2- the proportional plus basic pension and, 3- the proportional with means testing. The workers are grouped such as, awell- paid who report their full earnings (so-called the evaders), b- wellpaid who report only the minimum earnings and c- the poorly paid. It is assumed that the evaders have a hidden part of earnings for their oldage. The main result of the study is the following: if the evaders can be recognized and excluded, then the best system is the means-tested one.
International Burch University