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Aging, Labor Markets and Pension Reform in Austria

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Author Info
Keuschnigg Christian (University of St.Gallen)
Keuschnigg Mirela (University of St.Gallen)

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Abstract

This paper investigates the dynamic consequences of demographic change and various pension reform scenarios for Austria. The analysis is based on a computable overlapping generations model with life-cycle labor supply, savings, and search unemployment. The public sector is decomposed into general government and an unfunded pension system with a tax benefit linkage. Our quantitative analysis considers several pension reform scenarios on top of the demographic transition in an aging society. We find that lowering the pension replacement rate and increasing the retirement age can have strong labor market effects. They strengthen labor supply both in terms of job search intensity, leading to lower unemployment rates, and hours worked.

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Paper provided by EconWPA in its series GE, Growth, Math methods with number 0404002.

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Date of creation: 06 Apr 2004
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Handle: RePEc:wpa:wuwpge:0404002

Note: Type of Document - pdf. University of St.Gallen Economics Working Paper No 2004-03, January 2004
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Keywords: Pension reform demographic change unemployment

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Find related papers by JEL classification:
C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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References listed on IDEAS
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.:
  1. Heijdra, Ben J. & Keuschnigg, Christian & Kohler, Wilhelm, 2002. "Eastern enlargement of the EU: jobs, investment and welfare in present member countries," CCSO Working Papers 200213, University of Groningen, CCSO Centre for Economic Research. [Downloadable!]
    Other versions:
  2. Farmer, Roger E A, 1990. "Rince Preferences," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 43-60, February. [Downloadable!] (restricted)
    Other versions:
  3. Leif Lybecker Eskesen, 2002. "Population Aging and Long-Term Fiscal Sustainability in Austria," IMF Working Papers 02/216, International Monetary Fund. [Downloadable!]
  4. Breyer, Friedrich & Straub, Martin, 1993. "Welfare effects of unfunded pension systems when labor supply is endogenous," Journal of Public Economics, Elsevier, vol. 50(1), pages 77-91, January. [Downloadable!] (restricted)
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    Other versions:
  6. Gertler, Mark, 1999. "Government debt and social security in a life-cycle economy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50, pages 61-110, June. [Downloadable!] (restricted)
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  7. Shi, Shouyong & Wen, Quan, 1999. "Labor market search and the dynamic effects of taxes and subsidies," Journal of Monetary Economics, Elsevier, vol. 43(2), pages 457-495, April. [Downloadable!] (restricted)
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  9. Svend E. Hougaard Jensen & Morten I. Lau & Panu Poutvaara, 2004. "Efficiency and Equity Aspects of Alternative Social Security Rules," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 325-, September.
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  12. Weil, Philippe, 1990. "Nonexpected Utility in Macroeconomics," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 29-42, February. [Downloadable!] (restricted)
  13. Martin Feldstein, 2001. "The Future of Social Security Pensions in Europe," NBER Working Papers 8487, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. A. Bovenberg, 2003. "Financing Retirement in the European Union," Asia-Pacific Financial Markets, Springer, vol. 10(6), pages 713-734, November. [Downloadable!] (restricted)
    Other versions:
  16. Glenn W. Harrison & Morten I. Lau & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1606-1617, December. [Downloadable!] (restricted)
  17. Roland Demmel & Christian Keuschnigg, 2000. "Funded Pensions and Unemployment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(1), pages 22-, September.
  18. Christian Keuschnigg & Mirela Keuschnigg & Reinhard Koman & Erik Lüth & Bernd Raffelüschen, 2000. "Public Debt and Generational Balance in Austria," Empirica, Springer, vol. 27(3), pages 225-252, September. [Downloadable!] (restricted)
  19. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March. [Downloadable!] (restricted)
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  21. Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2002. "Aging and International Capital Flows," MEA discussion paper series 02010, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
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  22. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2001. "Demographic Shock and Social Security: A Political Economy Perspective," International Tax and Public Finance, Springer, vol. 8(4), pages 417-431, August. [Downloadable!] (restricted)
  23. Shi, Shouyong & Wen, Quan, 1997. "Labor market search and capital accumulation: Some analytical results," Journal of Economic Dynamics and Control, Elsevier, vol. 21(10), pages 1747-1776, August. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Juha Kilponen & Helvi Kinnunen & Antti Ripatti, 2006. "Demographic Uncertainty and Labour Market Imperfections in Small Open Economy," Computing in Economics and Finance 2006 227, Society for Computational Economics. [Downloadable!]
  2. Dominik Grafenhofer & Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2005. "Probabilistic Aging," University of St. Gallen Department of Economics working paper series 2005 2005-08, Department of Economics, University of St. Gallen. [Downloadable!]
    Other versions:
  3. Kilponen , Juha & Kinnunen , Helvi & Ripatti , Antti, 2006. "Population ageing in a small open economy – some policy experiments with a tractable general equilibrium model," Research Discussion Papers 28/2006, Bank of Finland. [Downloadable!]
  4. Christian Jaag, 2005. "The Role of Endogenous Skill Choice in an Aging Economy," Public Economics 0505005, EconWPA. [Downloadable!]
  5. Casamatta, Georges & De Paoli, Caroline, 2007. "Choosing the Legal Retirement Age in Presence of Unemployment," CEPR Discussion Papers 6263, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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