Age Before Beauty? Productivity and Work vs. Seniority and Early Retirement
AbstractWe show how the age pro le of earnings, retirement rules and retirement behavior are tightly linked through the general equilibrium of the economy. Generous Social Security bene ts nanced by large Social Security taxes discourage human capital accumulation. In Social Security systems where Social Security bene ts prioritize redistribution less productive workers with lower levels of human capital tend to retire earlier. These out ows of workers from the labor force tend to generate wage pro les that are monotonically increasing over age and labor markets that display larger seniority premia. This paper theoretically rationalizes the links between retirement rules and the wage structures over the life cycle and uses data on European countries to show how social security taxes, the age pro le of earnings, and retirement behavior are related.
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Bibliographic InfoPaper provided by Center for Research on Pensions and Welfare Policies, Turin (Italy) in its series CeRP Working Papers with number 120.
Length: 38 pages
Date of creation: May 2011
Date of revision:
Social Security tax; early retirement; age pro le of earnings; human capital; seniority premium;
Find related papers by JEL classification:
- 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
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
This paper has been announced in the following NEP Reports:
- NEP-AGE-2011-10-01 (Economics of Ageing)
- NEP-ALL-2011-10-01 (All new papers)
- NEP-DGE-2011-10-01 (Dynamic General Equilibrium)
- NEP-LAB-2011-10-01 (Labour Economics)
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