The pool of early retirees is characterized by a large heterogeneity along several criteria. The present paper focuses on the key distinction between those in forced early retirement and those who retire early by individual choice. We start by estimating a retirement probit model for older workers in Belgium. Based on these estimates, we then perform micro-simulations relating to a hypothetical actuarial reform of a pension system, i.e., a reform imposing on average actuarial neutrality with respect to the time of retirement. We explore two scenarios, one where the entire population is subjected to the actuarial system, and one where a duly screened sub-sample of the unemployed is shielded against these actuarial adjustment factors, a group we call the truly unemployed. We evaluate the impact on the average retirement age, the pension budgets as well as indicators of redistribution within the group of the elderly. We find that the extra budgetary gain of exposing this subgroup to the full-blown reform is modest, while the distributional cost is rather high. Our results thus comfort the idea that the budgetary cost of a focused unemployment system are moderate, and that returning the unemployment insurance to its primary role might be a desirable strategy.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
5077.
Find related papers by JEL classification: H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped
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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.:
Arnaud Dellis & Raphaël Desmet & Alain Jousten & Sergio Perelman, 2004.
"Micro-Modeling of Retirement in Belgium,"
NBER Chapters,
in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 41-98
National Bureau of Economic Research, Inc.
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Pierre Pestieau & Jean-Philippe Stijns, 1999.
"Social Security and Retirement in Belgium,"
NBER Chapters,
in: Social Security and Retirement around the World, pages 37-71
National Bureau of Economic Research, Inc.
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