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A life-cycle analysis of ending mandatory retirement

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  • Koka, Katerina
  • Kosempel, Stephen

Abstract

In this paper a life-cycle model is constructed to study the macroeconomic effects and welfare implications associated with eliminating mandatory retirement. Our short run analysis reveals that changes in welfare during the transition depend on the dynamic nature of the wage rate adjustment process. We distinguish between transitions in which the wage rate clears the labor market and transitions with a sticky wage and youth unemployment. We also examine political feasibility by measuring the popular support that this type of policy might have under the two labor market scenarios. Finally, we identify the effects that the policy has on welfare in the long run.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 38 (2014)
Issue (Month): C ()
Pages: 57-66

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Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:57-66

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Web page: http://www.elsevier.com/locate/inca/30411

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  1. Keuschnigg Christian & Keuschnigg Mirela, 2004. "Aging, Labor Markets and Pension Reform in Austria," GE, Growth, Math methods 0404002, EconWPA.
  2. Mariacristina De Nardi & Selahattin Imrohoglu & Thomas J. Sargent, 1998. "Projected U.S. demographics and social security," Working Paper Series WP-98-14, Federal Reserve Bank of Chicago.
  3. Conesa, Juan Carlos & Garriga, Carlos, 2003. "Status Quo Problem In Social Security Reforms," Macroeconomic Dynamics, Cambridge University Press, vol. 7(05), pages 691-710, November.
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  5. Paul Gomme & Richard Rogerson & Peter Rupert & Randall Wright, 2004. "The business cycle and the life cycle," Working Paper 0404, Federal Reserve Bank of Cleveland.
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  7. Hansen, G D, 1993. "The Cyclical and Secular Behaviour of the Labour Input: Comparing Efficiency Units and Hours Worked," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(1), pages 71-80, Jan.-Marc.
  8. R. Mehra & E. Prescott, 2010. "The equity premium: a puzzle," Levine's Working Paper Archive 1401, David K. Levine.
  9. Georg Hirte, 2002. "Welfare and Macroeconomic Effects of the German Pension Acts of 1992 and 1999: A Dynamic CGE Study," German Economic Review, Verein für Socialpolitik, vol. 3(1), pages 81-106, 02.
  10. HENIN, P. Y. & WEITZENBLUM, Th., 2005. "Welfare effects of alternative pension reforms: Assessing the transition costs for French socio-occupational groups," Journal of Pension Economics and Finance, Cambridge University Press, vol. 4(03), pages 249-271, November.
  11. Ketil Hviding & Marcel Mérette, 1998. "Macroeconomic Effects of Pension Reforms in The Context of Ageing Populations: Overlapping Generations Model Simulations for Seven OECD Countries," OECD Economics Department Working Papers 201, OECD Publishing.
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