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Early Retirement and Social Security: A Long Term Perspective

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Author Info
J. Ignacio Conde-Ruiz ()
Vincenzo Galasso ()
Paola Profeta ()

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Abstract

We provide a long-term perspective on the individual retirement behaviour and on the future of retirement. In a Markovian political economic theoretical framework, in which incentives to retire early are embedded, we derive a political equilibrium with positive social security contribution rates and early retirement. Aging has two opposite effects: it leads to lower taxes and fewer (early) retirees, while a poorer median voter will push for higher contributions. The model highlights the existence of crucial income effects: a decrease of the income of young people will induce them to postpone retirement and to vote for less social security.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1571.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1571

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Related research
Keywords: pensions; income effect; tax burden; politico-economic Markovian equilibrium;

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  17. Conde-Ruiz, José Ignacio & Galasso, Vincenzo, 2000. "Early Retirement," CEPR Discussion Papers 2589, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  18. Monika Bütler & Olivia Huguenin & Federica Teppa, 2005. "Why Forcing People to Save for Retirement May Backfire," University of St. Gallen Department of Economics working paper series 2005 2005-09, Department of Economics, University of St. Gallen. [Downloadable!]
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  19. Vincenzo Galasso & Paola Profeta, 2004. "Lessons For An Aging Society: The Political Sustainability Of Social Security Systems," Working Papers, Center for Retirement Research at Boston College 2004-07, Center for Retirement Research. [Downloadable!]
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  20. Conde-Ruiz, José Ignacio & Galasso, Vincenzo, 2003. "The Macroeconomics of Early Retirement," CEPR Discussion Papers 3896, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  24. Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1997. "Politico-economic equilibrium and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 243-272, January. [Downloadable!] (restricted)
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  29. Rob Euwals & Daniël van Vuuren & Ronald Wolthoff, 2005. "Early retirement behaviour in the Netherlands; evidence from a policy reform," CPB Discussion Papers 52, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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  30. Galasso, Vincenzo, 2000. "The US Social Security: A Financial Appraisal For The Median Voter," CEPR Discussion Papers 2456, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  32. 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. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Vincenzo Galasso, 2006. "Postponing Retirement: the Political Push of Aging," CSEF Working Papers 164, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
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