Consequences of a boost of mandatory retirement age on long run income and PAYG pensions
AbstractIn this paper we study the effects of a boost of the mandatory retirement age, which is largely advocated in most countries facing with both the decline in the labour force participation of elderly workers and the increasing population ageing. It is shown, in the basic two-period overlapping generations model of growth (Diamond, 1965), that the postponement of the retirement age may be harmful for long run income and when the capital’s share is sufficiently high even PAYG pensions are reduced. In conclusion, since it is shown that the age of retirement might be reduced obtaining a higher income and even higher pension benefits, then our results suggest that the idea that a higher mandatory age of retirement is always beneficial in the long run for income and pension payments is theoretically controversial.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2012/149.
Date of creation: 01 Sep 2012
Date of revision:
Retirement age; Pensions; OLG model.;
Find related papers by JEL classification:
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-AGE-2012-11-03 (Economics of Ageing)
- NEP-ALL-2012-11-03 (All new papers)
- NEP-DEM-2012-11-03 (Demographic Economics)
- NEP-DGE-2012-11-03 (Dynamic General Equilibrium)
- NEP-LAB-2012-11-03 (Labour Economics)
- NEP-LMA-2012-11-03 (Labor Markets - Supply, Demand, & Wages)
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.:
- Fanti, Luciano & Gori, Luca, 2010. "Increasing PAYG pension benefits and reducing contribution rates," Economics Letters, Elsevier, vol. 107(2), pages 81-84, May.
- Juan Lacomba & Francisco Lagos, 2006.
"Population aging and legal retirement age,"
Journal of Population Economics,
Springer, vol. 19(3), pages 507-519, July.
- Hans-Werner Sinn, 2011. "Introduction," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(3), pages 09-17, December.
- Casamatta, Georges & Cremer, Helmuth & Pestieau, Pierre, 2003.
"Voting on Pensions with Endogenous Retirement Age,"
CEPR Discussion Papers
3778, C.E.P.R. Discussion Papers.
- Momota, Akira, 2003. "A retirement decision in the presence of a social security system," Journal of Macroeconomics, Elsevier, vol. 25(1), pages 73-86, March.
- repec:fth:louvco:9951 is not listed on IDEAS
- Peter Diamond, 2007. "Top-heavy load: Trouble ahead for social security systems, Introduction by Peter A. Diamond," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 8(3), pages 28-36, October.
- Aamer Abu-Qarn & Suleiman Abu-Bader, 2007.
"Getting Income Shares Right: A Panel Data Investigation for OECD Countries,"
228, Ben-Gurion University of the Negev, Department of Economics.
- Aamer Abu-Qarn & Suleiman Abu-Bader, 2007. "Getting Income Shares Right: A Panel Data Investigation for OECD Countries," Working Papers 0701, Ben-Gurion University of the Negev, Department of Economics.
- Luca Gori & Luciano Fanti, 2008. "Longevity and PAYG pension systems sustainability," Economics Bulletin, AccessEcon, vol. 10(2), pages 1-8.
- J. Ignacio Conde-Ruiz & Vincenzo Galasso, .
"The Macroeconomic of Early Retirement,"
194, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Chakraborty, Shankha, 2004.
"Endogenous lifetime and economic growth,"
Journal of Economic Theory,
Elsevier, vol. 116(1), pages 119-137, May.
- Shankha Chakraborty, 2002. "Endogenous Lifetime and Economic Growth," University of Oregon Economics Department Working Papers 2002-03, University of Oregon Economics Department, revised 26 Jan 2002.
- de la Croix,David & Michel,Philippe, 2002.
"A Theory of Economic Growth,"
Cambridge University Press, number 9780521001151, April.
- Abdelhak Senhadji, 2000. "Sources of Economic Growth: An Extensive Growth Accounting Exercise," IMF Staff Papers, Palgrave Macmillan, vol. 47(1), pages 6.
- MICHEL, Philippe & PESTIEAU, Pierre, 1999.
"Social security and early retirement in an overlapping-generations growth model,"
CORE Discussion Papers
1999051, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Philippe Michel & Pierre Pestieau, 2013. "Social Security And Early Retirement In An Overlapping-Generations Growth Model," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 723-737, November.
- Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-83, June.
- Abu-Qarn, Aamer S. & Abu-Bader, Suleiman, 2007. "Sources of Growth Revisited: Evidence from Selected MENA Countries," World Development, Elsevier, vol. 35(5), pages 752-771, May.
- Miles, David K, 1997.
"Modelling the Impact of Demographic Change Upon the Economy,"
CEPR Discussion Papers
1762, C.E.P.R. Discussion Papers.
- Miles, David, 1999. "Modelling the Impact of Demographic Change upon the Economy," Economic Journal, Royal Economic Society, vol. 109(452), pages 1-36, January.
- Bertrand Crettez & Patricia Le Maitre, 2002. "Optimal age of retirement and population growth," Journal of Population Economics, Springer, vol. 15(4), pages 737-755.
- Robert J. Barro & Xavier Sala-i-Martin, 2003. "Economic Growth, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262025531, December.
- Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
- Tito Boeri & Axel Boersch-Supan & Guido Tabellini, 2002. "Pension Reforms and the Opinions of European Citizens," American Economic Review, American Economic Association, vol. 92(2), pages 396-401, May.
- Hans-Werner Sinn, 2013. "Introduction: relaunching Europe: problems, reform strategies and future options," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 14(3), pages 08-13, October.
- repec:ebl:ecbull:v:10:y:2008:i:2:p:1-8 is not listed on IDEAS
- Luciano Fanti & Luca Gori, 2009. "Longevity, fertility and PAYG pension systems sustainability," Discussion Papers 2009/77, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.