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Aging, Labor Markets, and Pension Reform in Austria

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  • Christian Keuschnigg
  • Mirela Keuschnigg

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 the labor supply both with respect to job search intensity, leading to lower unemployment rates, and with respect to hours worked.

Suggested Citation

  • Christian Keuschnigg & Mirela Keuschnigg, 2004. "Aging, Labor Markets, and Pension Reform in Austria," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 359-359, September.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200409)60:3_359:almapr_2.0.tx_2-l
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    Citations

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    Cited by:

    1. Geoffrey Hewings & Seryoung Park, "undated". "Aging and the Regional Economy: Simulation Results from the Chicago CGE Model," EcoMod2007 23900037, EcoMod.
    2. Sánchez-Romero, Miguel & Sambt, Jože & Prskawetz, Alexia, 2013. "Quantifying the role of alternative pension reforms on the Austrian economy," Labour Economics, Elsevier, vol. 22(C), pages 94-114.
    3. Dochka Velkova, 2008. "Changes in the Public Pension System and Their Impact on the Labor Market," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 22-59.
    4. Friese, Max, 2015. "The labor market effect of demographic change: Alleviation for financing social security," Thuenen-Series of Applied Economic Theory 138, University of Rostock, Institute of Economics.
    5. 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.
    6. Friese, Max, 2015. "The labor market effect of demographic change: Alleviation for financing social security," Thuenen-Series of Applied Economic Theory 138 [rev.], University of Rostock, Institute of Economics.
    7. Christian Jaag, 2005. "The Role of Endogenous Skill Choice in an Aging Economy," Public Economics 0505005, University Library of Munich, Germany.
    8. Koka, Katerina & Kosempel, Stephen, 2014. "A life-cycle analysis of ending mandatory retirement," Economic Modelling, Elsevier, vol. 38(C), pages 57-66.
    9. 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.
    10. Narazani, Edlira & Shima, Isilda, 2009. "Labour incentive reforms in pre-retirement age in Austria," EUROMOD Working Papers EM1/09, EUROMOD at the Institute for Social and Economic Research.
    11. Zou, Tieding, 2017. "延迟退休的制约因素、政策效果与动态研究方法评价
      [Restriction, Policy Effect and Dynamic Research Method to Delay Retirement]
      ," MPRA Paper 85556, University Library of Munich, Germany, revised 30 Jan 2018.
    12. Pedro S. Raposo & Pedro Portugal, 2015. "Seriously Strengthening the Tax-Benefit Link," Working Papers w201505, Banco de Portugal, Economics and Research Department.
    13. Portugal, Pedro & Raposo, Pedro, 2015. "Seriously Strengthening the Tax-Benefit Link," IZA Discussion Papers 8785, Institute for the Study of Labor (IZA).
    14. Dominik Grafenhofer & Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2007. "Economic ageing and demographic change," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 5(1), pages 133-165.
    15. 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.
    16. 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.
    17. Christian Keuschnigg & Mirela Keuschnigg & Christian Jaag, 2011. "Aging and the Financing of Social Security in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(II), pages 181-231, June.
    18. Friese, Max, 2016. "The labor market effect of demographic change: Alleviation for financing social security," Annual Conference 2016 (Augsburg): Demographic Change 145808, Verein für Socialpolitik / German Economic Association.
    19. Muhammad Rahman, 2008. "Demographic Uncertainty and Welfare in a Life-Cycle Model Under Alternative Public Pension Systems," Caepr Working Papers 2008-024, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.

    More about this item

    Keywords

    pension reform; CGE; aging; labor market;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - 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, Vacancies, and Immigrant Workers - - - 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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