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The Evolution of Retirement

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  • Conde-Ruiz, José Ignacio
  • Galasso, Vincenzo
  • Profeta, Paola

Abstract

We provide a long-term perspective on the individual retirement behaviour and on the future of early retirement. In a cross-country sample, we find that total pension spending depends positively on the degree of early retirement and on the share of elderly in the population, which increase the proportion of retirees, but has hardly any effect on the per capita pension benefits. We show that in a Markovian political economic theoretical framework, in which incentives to retire early are embedded, a political equilibrium is characterized by an increasing sequence of social security contribution rates converging to a steady state and early retirement. Comparative statistics suggest that aging and productivity slow-downs lead to higher taxes and more early retirement. However, when income effects are factored in, the model suggests that periods of stagnation – characterized by decreasing labour income – may lead middle-aged individuals to postpone retirement.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4863.

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Date of creation: Jan 2005
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Handle: RePEc:cpr:ceprdp:4863

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

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References

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Citations

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Cited by:
  1. José M. Labeaga & Ester Martínez Ros, 2003. "Persistence And Ability In The Innovation Decisions," Business Economics Working Papers wb030101, Universidad Carlos III, Departamento de Economía de la Empresa.
  2. Namkee Ahn, . "Life Satisfaction among Spanish Workers: Importance of Intangible Job Characteristics," Working Papers 2005-17, FEDEA.
  3. Juan Lacomba & Francisco Lagos, 2006. "Population aging and legal retirement age," Journal of Population Economics, Springer, vol. 19(3), pages 507-519, July.
  4. Ana Carolina Ortega Masagué, . "La situación laboral de los inmigrantes en España: Un análisis descriptivo," Working Papers 2005-08, FEDEA.
  5. Namkee Ahn & Juan Ramón García & José A. Herce, . "Demographic Uncertainty and Health Care Expenditure in Spain," Working Papers 2005-07, FEDEA.
  6. Ryo Arawatari & Tetsuo Ono, 2010. "Retirement and Social Security: A Political Economy Perspective," Discussion Papers in Economics and Business 10-04-Rev, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  7. Corinne Mette, . "Wellbeing and dependency among European elderly: The role of social integration," Working Papers 2005-12, FEDEA.
  8. José M. Labeaga & Xisco Oliver & Amedeo Spadaro, . "Measuring Changes in Health Capital," Working Papers 2005-15, FEDEA.
  9. Giovanni Mastrobuoni & Filippo Taddei, 2011. "Age Before Beauty? Productivity and Work vs. Seniority and Early Retirement," CeRP Working Papers 120, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  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. Gilles Le Garrec, 2005. "Systèmes de retraite et vieillissement," Documents de Travail de l'OFCE 2005-21, Observatoire Francais des Conjonctures Economiques (OFCE).

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