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Social security and early retirement in an overlapping-generations growth model

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Author Info

  • MICHEL, Philippe

    (IUP and GREQAM, Marseille, France)

  • PESTIEAU, Pierre

    ()
    (CREPP, Liège, Belgium; CORE, Louvain-la-Neuve, Belgium and DELTA, Paris, France)

Abstract

This paper explains why workers retire earlier, and earlier at the same time as society becomes more and more indebted through increasing pay-as-you-go pension liabilities. To do so, we extend the standard twooverlapping-generations growth model to allow for endogenous labor participation in the later period of life. We show that the rate of participation declines as the size of social security system increases. We also show that mandatory early retirement many be socially desirable in case of underaccumulation.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1999051.

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Date of creation: 01 Sep 1999
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Handle: RePEc:cor:louvco:1999051

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  1. Weil, Philippe, 1987. "Love thy children : Reflections on the Barro debt neutrality theorem," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 377-391, May.
  2. Boskin, Michael J, 1977. "Social Security and Retirement Decisions," Economic Inquiry, Western Economic Association International, vol. 15(1), pages 1-25, January.
  3. Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-83, June.
  4. Burbidge, John B., 1983. "Social security and savings plans in overlapping-generations models," Journal of Public Economics, Elsevier, vol. 21(1), pages 79-92, June.
  5. Kotlikoff, Laurence J & Summers, Lawrence H, 1979. "Tax Incidence in a Life Cycle Model with Variable Labor Supply," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 705-18, November.
  6. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
  7. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
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Cited by:
  1. J. Ignacio Conde-Ruiz & Vincenzo Galasso & Paola Profeta, 2005. "Early Retirement and Social Security: A Long Term Perspective," CESifo Working Paper Series 1571, CESifo Group Munich.
  2. Pedro Cardoso & Bernard M.S. van Praag, 2003. "How Sustainable Are Old-age Pensions in a Shrinking Population with Endogenous Labour Supply?," CESifo Working Paper Series 861, CESifo Group Munich.
  3. Vincenzo Galasso, 2012. "The Political Feasibility of Postponing Retirement," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 10(4), pages 27-31, December.
  4. Conde-Ruiz, José Ignacio & Galasso, Vincenzo & Profeta, Paola, 2005. "The Evolution of Retirement," CEPR Discussion Papers 4863, C.E.P.R. Discussion Papers.
  5. Juan A. Lacomba & Francisco M. Lagos, 2009. "Reforming the retirement scheme: Flexible retirement vs. Legal retirement age," ThE Papers 09/01, Department of Economic Theory and Economic History of the University of Granada..
  6. Luciano Fanti, 2012. "Consequences of a boost of mandatory retirement age on long run income and PAYG pensions," Discussion Papers 2012/149, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  7. DE LA CROIX, David & MAHIEU, Géraldine & RILLAERS, Alexandra, . "How should the allocation of resources adjust to the baby bust?," CORE Discussion Papers RP -1741, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Alvaro Forteza & Irene Mussio, 2012. "Assessing Redistribution in the Uruguayan Social Security System," Journal of Income Distribution, Journal of Income Distribution, vol. 21(1), pages 65-87, March.
  9. de la Croix, David & Mahieu, Géraldine & Rillaers, Alexandra, 2000. "How should retirement policy adjust to the baby bust ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  10. Glomm, Gerhard & Jung, Juergen & Tran, Chung, 2009. "Macroeconomic implications of early retirement in the public sector: The case of Brazil," Journal of Economic Dynamics and Control, Elsevier, vol. 33(4), pages 777-797, April.
  11. Luca Gori & Mauro Sodini, 2011. "Nonlinear Dynamics in an OLG Growth Model with Young and Old Age Labour Supply: The Role of Public Health Expenditure," Computational Economics, Society for Computational Economics, vol. 38(3), pages 261-275, October.
  12. Alvaro Forteza, 2011. "Assessing Redistribution within Social Insurance Systems.The cases of Argentina, Brazil, Chile, Mexico and Uruguay," Documentos de Trabajo (working papers) 1311, Department of Economics - dECON.

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