IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Quantifying the role of alternative pension reforms on the Austrian economy

  • Sánchez-Romero, Miguel
  • Sambt, Jože
  • Prskawetz, Alexia

This paper investigates the role of recent pension reforms for the development of the social security system and economic growth in Austria. We use a computable general equilibrium model that is built up of overlapping generations that differ by their household structure, longevity, educational attainment, and capital accumulation. Each household optimally decides over its consumption paths, work effort, and retirement age according to the life-cycle theory of labor, while they face survival risk. We find that the pension reforms implemented from 2000 to 2004, although in the correct direction, are not sufficient to solve the labor market distortion caused by the Austrian pay-as-you-go (PAYG) pension system. Using alternative policy options, our simulations indicate that a change to a notional defined contribution system and an increase in the educational distribution of the work force would increase the incentive for later retirement ages and thereby increase labor supply and economic growth.

If 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.

File URL:
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 22 (2013)
Issue (Month): C ()
Pages: 94-114

in new window

Handle: RePEc:eee:labeco:v:22:y:2013:i:c:p:94-114
Contact details of provider: Web page:

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.:

as in new window
  1. Michael Keane, 2010. "Labor Supply and Taxes: A Survey," Working Paper Series 160, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
  2. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2000. "Vintage Human Capital, Demographic Trends and Endogenous Growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Axel B�Rsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
  4. Isilda Mara & Edlira Narazani, 2011. "Labour-incentive reforms at preretirement age in Austria," Empirica, Springer, vol. 38(4), pages 481-510, November.
  5. Selahattin Imrohoroglu & Sagiri Kitao, 2009. "Labor Supply Elasticity and Social Security Reform," Working Papers, Center for Retirement Research at Boston College wp2009-5, Center for Retirement Research, revised Mar 2009.
  6. Mark Gertler, 1997. "Government Debt and Social Security in a Life-Cycle Economy," NBER Working Papers 6000, National Bureau of Economic Research, Inc.
  7. Martin Browning & Annamaria Lusardi, 1995. "Household Saving: Micro Theories and Micro Facts," Department of Economics Working Papers 1995-02, McMaster University.
  8. Markus Knell & Walpurga Köhler-Töglhofer & Doris Prammer, 2006. "The Austrian Pension System – How Recent Reforms Have Changed Fiscal Sustainability and Pension Benefits," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 69–93.
  9. R. Anton Braun & Daisuke Ikeda & Douglas H. Joines, 2007. "The Saving Rate in Japan: Why It Has Fallen and Why It Will Remain Low," CIRJE F-Series CIRJE-F-535, CIRJE, Faculty of Economics, University of Tokyo.
  10. repec:hal:cesptp:hal-00659868 is not listed on IDEAS
  11. Alexander Ludwig & Michael Reiter, 2008. "Sharing Demographic Risk – Who is Afraid of the Baby Bust?," CESifo Working Paper Series 2422, CESifo Group Munich.
  12. Staubli, Stefan & Zweimüller, Josef, 2011. "Does Raising the Retirement Age Increase Employment of Older Workers?," IZA Discussion Papers 5863, Institute for the Study of Labor (IZA).
  13. Walter H. Fisher & Christian Keuschnigg, 2007. "Pension Reform and Labor Market Incentives," CESifo Working Paper Series 2057, CESifo Group Munich.
  14. D'Albis, Hippolyte & Lau, Paul S. & Sanchez-Romero, Miguel, 2012. "Mortality transition and differential incentives for early retirement," Economics Papers from University Paris Dauphine 123456789/6825, Paris Dauphine University.
  15. Jonathan Gruber & David A. Wise, 2007. "Social Security Programs and Retirement around the World: Fiscal Implications of Reform," NBER Books, National Bureau of Economic Research, Inc, number grub07-1, July.
  16. Ben J. Heijdra & Ward E. Romp, 2007. "Retirement, Pensions, and Ageing," CESifo Working Paper Series 1974, CESifo Group Munich.
  17. Juan A. Rojas, . "Life-cycle Earnings Cohort Size Effects and Social Security. A Quantitative Exploration," Studies on the Spanish Economy 88, FEDEA.
  18. Hippolyte D'Albis & Emmanuelle Augeraud-Véron, 2008. "Endogenous Retirement and Monetary Cycles," Post-Print hal-00424801, HAL.
  19. Adriaan Kalwij, 2010. "The impact of family policy expenditure on fertility in western Europe," Demography, Springer, vol. 47(2), pages 503-519, May.
  20. Alan J. Auerbach & Ronald Lee, 2009. "Notional Defined Contribution Pension Systems in a Stochastic Context: Design and Stability," NBER Chapters, in: Social Security Policy in a Changing Environment, pages 43-68 National Bureau of Economic Research, Inc.
  21. Christian Keuschnigg & Mirela Keuschnigg, 2004. "Aging, Labor Markets, and Pension Reform in Austria," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 359-, September.
  22. Steven Lugauer & Nelson C. Mark & Chadwick R. Curtis, 2011. "Demographic Patterns and Household Saving in China," 2011 Meeting Papers 529, Society for Economic Dynamics.
  23. Martin Browning & Mette Ejrnæs, 2002. "Consumption and Children," CAM Working Papers 2002-06, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  24. Florian Heiss & Alexander Ludwig & Joachim Winter, 2002. "Pension reform, capital markets, and the rate of return," MEA discussion paper series 02023, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  25. Heckman, James J & Macurdy, Thomas E, 1980. "A Life Cycle Model of Female Labour Supply," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 47-74, January.
  26. Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2007. "Pension Reform, Retirement and Life-Cycle Unemployment," CESifo Working Paper Series 2163, CESifo Group Munich.
  27. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1, July.
  28. Orazio P. Attanasio & Guglielmo Weber, 2010. "Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy," NBER Working Papers 15756, National Bureau of Economic Research, Inc.
  29. Daron Acemoglu & David Autor, 2012. "What Does Human Capital Do? A Review of Goldin and Katz's The Race between Education and Technology," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 426-63, June.
  30. Jonathan Gruber & David A. Wise, 2007. "Introduction to "Social Security Programs and Retirement around the World: Fiscal Implications of Reform"," NBER Chapters, in: Social Security Programs and Retirement around the World: Fiscal Implications of Reform, pages 1-42 National Bureau of Economic Research, Inc.
  31. Heckman, James J & MaCurdy, Thomas, 1982. "Corrigendum on a Life Cycle Model of Female Labour Supply," Review of Economic Studies, Wiley Blackwell, vol. 49(4), pages 659-60, October.
  32. Helmut Hofer & Reinhard Koman, 2006. "Social security and retirement incentives in Austria," Empirica, Springer, vol. 33(5), pages 285-313, December.
  33. repec:fda:fdaddt:2000-02 is not listed on IDEAS
  34. Lam, David, 1989. "Population Growth, Age Structure, and Age-Specific Productivity: Does a Uniform Age Distribution Minimize Lifetime Wages?," Journal of Population Economics, Springer, vol. 2(3), pages 189-210.
  35. Samir KC & Bilal Barakat & Anne Goujon & Vegard Skirbekk & Warren C. Sanderson & Wolfgang Lutz, 2010. "Projection of populations by level of educational attainment, age, and sex for 120 countries for 2005-2050," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 22(15), pages 383-472, March.
  36. Michael Keane & Richard Rogerson, 2012. "Micro and Macro Labor Supply Elasticities: A Reassessment of Conventional Wisdom," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 464-76, June.
  37. Selahattin Imrohoroglu & Sagiri Kitao, 2012. "Social Security Reforms: Benefit Claiming, Labor Force Participation, and Long-Run Sustainability," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 96-127, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:22:y:2013:i:c:p:94-114. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.