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Early Retirement

Author

Listed:
  • J. Ignacio Conde-Ruiz

    (FEDEA and Universitat Pompeu Fabra)

  • Vincenzo Galasso

    (Universita Bocconi and IGIER)

Abstract

Generous early retirement provisions account for a large proportion of the drop in the labor force participation of elderly workers. The aim of this paper is to provide a positive theory of early retirement. We suggest that the political support for generous early retirement provisions relies on: (i) the existence of a significant group of elderly workers with incomplete working history, who are not entitled to an old age pension; and (ii) the intragenerational redistribution built in this provision via the utility from leisure that induces low-ability workers to retire early. The majority which supports early retirement in a bidimensional voting game is composed of elderly with incomplete working history and low-ability workers; social security is supported by retirees and low-ability workers. (Copyright: Elsevier)

Suggested Citation

  • J. Ignacio Conde-Ruiz & Vincenzo Galasso, 2003. "Early Retirement," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 12-36, January.
  • Handle: RePEc:red:issued:v:6:y:2003:i:1:p:12-36
    DOI: 10.1016/S1094-2025(02)00018-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Social security; Policy persistence; Structure-induced equilibrium;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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