Postponing Retirement: the Political Push of Aging
AbstractConventional economic wisdom suggests because of the aging process, social security systems will have to be retrenched. In particular, retirement age will have to be largely increased. Yet, is this policy measure feasible in OECD countries? Since the answer belongs mainly to the realm of politics, I evaluate the political feasibility of postponing retirement under aging in France, Italy, the UK, and the US. Simulations for the year 2050 steady state demographic, economic and political scenario suggest that retirement age will be postponed in all countries, while the social security contribution rate will rise in all countries, but Italy. The political support for increasing the retirement age stems mainly from the negative income effect induced by aging, which reduces the profitability of the existing social security system, and thus the individuals net social security wealth.
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Bibliographic InfoPaper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 164.
Date of creation: 01 Sep 2006
Date of revision:
Other versions of this item:
- Vincenzo Galasso, 2006. "Postponing Retirement: the Political Push of Aging," Working Papers 315, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Galasso, Vincenzo, 2006. "Postponing Retirement: the Political Push of Aging," CEPR Discussion Papers 5777, C.E.P.R. Discussion Papers.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H5 - Public Economics - - National Government Expenditures and Related Policies
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-23 (All new papers)
- NEP-EEC-2006-09-23 (European Economics)
- NEP-POL-2006-09-23 (Positive Political Economics)
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