Pension Benefit and Hours Worked
AbstractThis paper clarifies the effects of pension benefit systems on aggregate hours worked. By incorporating the labor income taxes and the social security taxes into a representative agent model, previous studies successfully explain the long term decline in the hours worked in some continental European countries, and the differences between these European countries and the U.S. in recent years. However, their model underpredicts the hours worked in Japan and Sweden. We measure the marginal pension benefit rates of the labor supply, which the previous studies do not take into account, and incorporate them into previous studies. We fid that the marginal pension benefit can explain much of the discrepancy between the actual hours worked and the predictions of the previous studies. This result also implies that the pension benefit might offset the effect of the unemployment insurance that is thought to make the prediction worse in some continental European countries.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 10004.
Length: 49 pages
Date of creation: Jan 2010
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-AGE-2010-01-30 (Economics of Ageing)
- NEP-ALL-2010-01-30 (All new papers)
- NEP-BEC-2010-01-30 (Business Economics)
- NEP-DGE-2010-01-30 (Dynamic General Equilibrium)
- NEP-EEC-2010-01-30 (European Economics)
- NEP-LAB-2010-01-30 (Labour Economics)
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- Ko, Jun-Hyung, 2011. "Has the Government Lowered the Hours Worked? Evidence from Japan," MPRA Paper 30058, University Library of Munich, Germany.
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