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Labor supply and government programs: A cross-country analysis

  • Erosa, Andrés
  • Fuster, Luisa
  • Kambourov, Gueorgui

There are substantial cross-country differences in labor supply late in the life cycle (age 50+). A theory of labor supply and retirement decisions is developed to quantitatively assess the role of social security, disability insurance, and taxation for understanding differences in labor supply late in the life cycle across European countries and the United States. The findings support the view that government policies can go a long way towards accounting for the low labor supply late in the life cycle in the European countries relative to the United States, with social security rules accounting for the bulk of these effects.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 59 (2012)
Issue (Month): 1 ()
Pages: 84-107

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Handle: RePEc:eee:moneco:v:59:y:2012:i:1:p:84-107
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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  12. Luisa Fuster & Ayşe İmrohoroğlu & Selahattin İmrohoroğlu, 2007. "Elimination of Social Security in a Dynastic Framework," Review of Economic Studies, Oxford University Press, vol. 74(1), pages 113-145.
  13. Richard Rogerson, 2007. "Taxation and Market Work: Is Scandinavia an Outlier?," NBER Working Papers 12890, National Bureau of Economic Research, Inc.
  14. Eric French, 2000. "The effects of health, wealth, and wages on labor supply and retirement behavior," Working Paper Series WP-00-2, Federal Reserve Bank of Chicago.
  15. Andrés Erosa & Luisa Fuster & Gueorgui Kambourov, 2011. "Towards a micro-founded theory of aggregate labor supply," Working Papers 2011-13, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales, revised 23 Nov 2011.
  16. Mark Huggett & Gustavo Ventura, 1999. "On the Distributional Effects of Social Security Reform," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(3), pages 498-531, July.
  17. Daniel Aaronson & Eric French, 2001. "The effect of part-time work on wages: evidence from the Social Security rules," Working Paper Series WP-01-20, Federal Reserve Bank of Chicago.
  18. Rob Euwals & Daniel van Vuuren & Ronald Wolthoff, 2005. "Early retirement behaviour in the Netherlands; evidence from a policy reform," CPB Discussion Paper 52, CPB Netherlands Bureau for Economic Policy Analysis.
  19. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
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  24. Luisa Fuster & Ayse Imrohoroglu & Selahattin Imrohoroglu, 2003. "A welfare analysis of social security in a dynastic framework," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1247-1274, November.
  25. Bhattacharya, Jay & Lakdawalla, Darius, 2006. "Does Medicare benefit the poor?," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 277-292, January.
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  28. Agar Brugiavini & Franco Peracchi, 2004. "Micro-Modeling of Retirement Behavior in Italy," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 345-398 National Bureau of Economic Research, Inc.
  29. Imrohoroglu, Ayse & Imrohoroglu, Selahattin & Joines, Douglas H, 1995. "A Life Cycle Analysis of Social Security," Economic Theory, Springer, vol. 6(1), pages 83-114, June.
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