By using a simple model, it will be analyzed the impact that informality has in the amount of consumption of the workers during their life cycle. This paper deals with the interconnections of underreported earnings, savings and old-age pension. The workers sampled for this analysis have been divided into three groups:
1. Low income employees,
2. Higher income employees who declare all incomes,
3. Employees who underreport their incomes.
In this paper the analysis is based on two pension models: the model that calculates pension in conformity with the incomes and the basic model, whose objective is poverty reduction for the “third age”. The major result is as follows:
Given the fact that the basic pension system favors employees that underreport their incomes and the fact that the impact of informality is greater in the basic system than in the proportional pension system, the application of basic pension system in the Albanian might be problematic.
The Impact of Informal Economy in the Pension System, Empirical Analysis. The Albanian Case (1.4 MiB, 2,441 hits)
