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Age-dependent Taxation, Retirement Behavior, and Work Hours Over the Life Cycle

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  • Julian Diaz Saavedra

    (Department of Economic Theory and Economic History, University of Granada.)

Abstract

We use a computable overlapping generations model economy, which matches the stylized facts con- cerning retirement behavior, to analyze the consequences of three reforms designed to reduce tax rates on the labor supply of older workers. We nd that these reforms increase the participation rates of the elderly and show that the gains, in terms of old age work hours, are non-trivial. However, we also nd that the total labor supply response to the reforms is not so much an increase in total lifetime hours as it is a reallocation of hours over the life cycle. Finally, we show that these reforms, designed to increase the length of the working life of individuals, may not increase output.

Suggested Citation

  • Julian Diaz Saavedra, 2013. "Age-dependent Taxation, Retirement Behavior, and Work Hours Over the Life Cycle," ThE Papers 13/09, Department of Economic Theory and Economic History of the University of Granada..
    • Handle: RePEc:gra:wpaper:13/09
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    File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers13_09.pdf
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    References listed on IDEAS

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    Cited by:

    1. Julian Diaz Saavedra, 2014. "Early Retirement, Social Security, and Output Gap," ThE Papers 14/01, Department of Economic Theory and Economic History of the University of Granada..

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    More about this item

    Keywords

    Computable general equilibrium; labor supply; retirement; age-dependent taxation.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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