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A life-cycle analysis of ending mandatory retirement

  • Koka, Katerina
  • Kosempel, Stephen

In this paper a life-cycle model is constructed to study the macroeconomic effects and welfare implications associated with eliminating mandatory retirement. Our short run analysis reveals that changes in welfare during the transition depend on the dynamic nature of the wage rate adjustment process. We distinguish between transitions in which the wage rate clears the labor market and transitions with a sticky wage and youth unemployment. We also examine political feasibility by measuring the popular support that this type of policy might have under the two labor market scenarios. Finally, we identify the effects that the policy has on welfare in the long run.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 38 (2014)
Issue (Month): C ()
Pages: 57-66

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Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:57-66
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  8. Mehra, Rajnish & Prescott, Edward C., 1985. "The equity premium: A puzzle," Journal of Monetary Economics, Elsevier, vol. 15(2), pages 145-161, March.
  9. Ketil Hviding & Marcel Mérette, 1998. "Macroeconomic Effects of Pension Reforms in The Context of Ageing Populations: Overlapping Generations Model Simulations for Seven OECD Countries," OECD Economics Department Working Papers 201, OECD Publishing.
  10. Hansen, G.D., 1991. "The Cyclical and Secular Behavior of the Labor Input : Comparing Efficiency Units and Hours Worked," Papers 36, California Los Angeles - Applied Econometrics.
  11. HENIN, P. Y. & WEITZENBLUM, Th., 2005. "Welfare effects of alternative pension reforms: Assessing the transition costs for French socio-occupational groups," Journal of Pension Economics and Finance, Cambridge University Press, vol. 4(03), pages 249-271, November.
  12. Conesa, Juan Carlos & Garriga, Carlos, 2003. "Status Quo Problem In Social Security Reforms," Macroeconomic Dynamics, Cambridge University Press, vol. 7(05), pages 691-710, November.
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