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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.

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File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers13_09.pdf
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Bibliographic Info

Paper provided by Department of Economic Theory and Economic History of the University of Granada. in its series ThE Papers with number 13/09.

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Length: 37 pages
Date of creation: 25 Sep 2013
Date of revision:
Handle: RePEc:gra:wpaper:13/09

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Keywords: Computable general equilibrium; labor supply; retirement; age-dependent taxation.;

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References

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  8. Sergi Jiménez-Martín & Alfonso R. Sánchez Martín, 2003. "An evaluation of the life-cycle effects of minimum pensions on retirement behavior," Working Papers 108, Barcelona Graduate School of Economics.
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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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