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Senior activity rate, retirement incentives, and labor relations

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  • Blake, Hélène
  • Sangnier, Marc

Abstract

In order to face the aging of their populations governments of developed countries reformed their retirement systems during the last two decades, by discouraging early retirement and increasing incentives to work for older workers. Senior participation rates to the labor force not only differ strikingly in level from one country to another, they also differ in their reaction to retirement incentives set by governments. This paper highlights how disutility to work can influence the effectiveness of such reforms. The authors build a highly stylized model according to which the reaction of senior activity rate to monetary incentives to work depends on the properties of the specific distribution of working conditions in the country. Second, taking the quality of labor relations as a proxy for working conditions, the authors show empirically that aggregate reactions to retirement incentives depend on the distribution of labor relations at country level. They use panel data for nineteen OECD countries from 1980 to 2004. They show that the elasticity of senior male labor force participation rate to retirement incentives is stronger in countries with better and more homogeneously distributed labor relations. --

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File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2011-8
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Bibliographic Info

Article provided by Kiel Institute for the World Economy in its journal Economics: The Open-Access, Open-Assessment E-Journal.

Volume (Year): 5 (2011)
Issue (Month): 8 ()
Pages: 1-32

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Handle: RePEc:zbw:ifweej:20118

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Keywords: Early retirement incentives; labor relations; senior activity rate;

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  1. Philippe Aghion & Yann Algan & Pierre Cahuc, 2011. "Civil Society And The State: The Interplay Between Cooperation And Minimum Wage Regulation," Journal of the European Economic Association, European Economic Association, vol. 9(1), pages 3-42, 02.
  2. Liebman, Jeffrey B. & Luttmer, Erzo F.P. & Seif, David G., 2009. "Labor Supply Responses to Marginal Social Security Benefits: Evidence from Discontinuities," Scholarly Articles 4481678, Harvard Kennedy School of Government.
  3. Giavazzi, Francesco & Schiantarelli, Fabio & Serafinelli, Michel, 2009. "Culture, Policies and Labor Market Outcomes," CEPR Discussion Papers 7536, C.E.P.R. Discussion Papers.
  4. Daron Acemoglu & Simon Johnson & Pablo Querubin & James A. Robinson, 2008. "When Does Policy Reform Work? The Case of Central Bank Independence," NBER Working Papers 14033, National Bureau of Economic Research, Inc.
  5. Romain Duval, 2003. "The Retirement Effects of Old-Age Pension and Early Retirement Schemes in OECD Countries," OECD Economics Department Working Papers 370, OECD Publishing.
  6. Pierre Cahuc & Philippe Aghion & Yann Algan, 2008. "Can Policy Interact with Culture? Minimum Wage and the Quality of Labor Relations," Sciences Po publications 3680, Sciences Po.
  7. Olivier Blanchard & Thomas Philippon, 2004. "The Quality of Labor Relations and Unemployment," NBER Working Papers 10590, National Bureau of Economic Research, Inc.
  8. David M. Blau & Ryan M. Goodstein, 2010. "Can Social Security Explain Trends in Labor Force Participation of Older Men in the United States?," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
  9. Romain Duval, 2003. "Retirement Behaviour in OECD Countries: Impact of Old-Age Pension Schemes and other Social Transfer Programmes," OECD Economic Studies, OECD Publishing, vol. 2003(2), pages 7-50.
  10. Galasso, Vincenzo & Profeta, Paola, 2002. "The political economy of social security: a survey," European Journal of Political Economy, Elsevier, vol. 18(1), pages 1-29, March.
  11. Cheron, Arnaud & Khaskhoussi, Fouad & Khaskhoussi, Tarek & Langot, François, 2004. "Voluntary and involuntary retirement decision : does real wage rigidity affects the effectiveness of pension reforms ?," MPRA Paper 9119, University Library of Munich, Germany.
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