A One-Sector Neoclassical Growth Model with Endogenous Retirement
Abstract
This paper extends Diamond's OG model by allowing the agents to make the retirement decision. Earning a higher wage income when young not only enables the agents to save more. It also induces more agents to retire early and gives an additional incentive to save more for retirement. This leads to a higher capitallabor ratio in the following period, and hence the next generation of agents earns a higher wage income when young. Due to this positive feedback mechanism, endogenous retirement magnifies the persistence of growth dynamics and even generates multiple steady states for empirically plausible parameter values.Download Info
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-531.Length: 26 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:tky:fseres:2007cf531
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Related research
Keywords:Other versions of this item:
- Kiminori Matsuyama, 2008. "A One-Sector Neoclassical Growth Model With Endogenous Retirement," The Japanese Economic Review, Japanese Economic Association, vol. 59(2), pages 139-155.
- NEP-ALL-2007-12-15 (All new papers)
- NEP-DGE-2007-12-15 (Dynamic General Equilibrium)
References
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- Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
- Reichlin, Pietro, 1986. "Equilibrium cycles in an overlapping generations economy with production," Journal of Economic Theory, Elsevier, vol. 40(1), pages 89-102, October.
- Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Rosa Aísa & Fernando Pueyo & Marcos Sanso, 2012. "Life expectancy and labor supply of the elderly," Journal of Population Economics, Springer, vol. 25(2), pages 545-568, January.
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