Macroeconomic implications of early retirement in the public sector: The case of Brazil
AbstractIn Brazil generous public sector pensions have induced civil servants to retire on average at age 55. In this paper we use an OLG model to assess the effects of such policy induced early retirement on capital accumulation and long-run income levels. We calibrate the model to data from Brazil and then conduct policy experiments changing the generosity of (early) public sector pensions. We find that the current generosity of public sector pensions which induces civil servants to retire 10 years prematurely (at age 55 rather than at age 65) is often associated with decreases in steady state output (GDP) of over 2 percent and welfare losses in the private sector of more than 1 percent of consumption.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Dynamics and Control.
Volume (Year): 33 (2009)
Issue (Month): 4 (April)
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Early retirement Pension reform Public sector retirement Capital accumulation;
Other versions of this item:
- Gerhard Glomm & Juergen Jung & Chung Tran, 2006. "Macroeconomic Implications of Early Retirement in the Public Sector: The Case of Brazil," Caepr Working Papers 2006-008, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
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