IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Aging and pensions in general equilibrium: labor market imperfections matter

  • de la CROIX, David
  • PIERRARD, Olivier
  • SNEESSENS, Henri R.

This paper re-examines the effects of population aging and pension reforms in an OLG model with labor market frictions. The most important feature brought about by labor market frictions is the connection between the interest rate and the unemployment rate. Exogenous shocks (such as aging) leading to lower interest rates also imply lower equilibrium unemployment rates, because lower capital costs stimulate labor demand and induce firms to advertize more vacancies. These effects may be reinforced by increases in the participation rate of older workers, induced by the higher wage rates and the larger probability of finding a job. These results imply that neglecting labor market frictions and employment rate changes may seriously bias the evaluation of pension reforms when they have an impact on the equilibrium interest rate.

(This abstract was borrowed from another version of this item.)

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: http://dx.doi.org/10.1016/j.jedc.2012.06.011
Our checks indicate that this address may not be valid because: 503 Service Unavailable (http://dx.doi.org/10.1016/j.jedc.2012.06.011 [303 See Other]--> http://linkinghub.elsevier.com/retrieve/pii/S0165188912001479 [301 Moved Permanently]--> http://linkinghub.elsevier.com/retrieve/articleSelectSinglePerm?Redirect=http://www.sciencedirect.com/science/article/pii/S0165188912001479?via%3Dihub&key= [301 Moved Permanently]--> http://www.sciencedirect.com/science/article/pii/S0165188912001479?via=ihub). If this is indeed the case, please notify (Alain GILLIS)


Download Restriction: no

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2495.

as
in new window

Length:
Date of creation:
Date of revision:
Handle: RePEc:cor:louvrp:-2495
Note: In : Journal of Economic Dynamics & Control, 37(1), 104-124, 2013
Contact details of provider: Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)
Phone: 32(10)474321
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
Email:


More information through EDIRC

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. Attanasio, Orazio & Kitao, Sagiri & Violante, Giovanni L., 2007. "Global demographic trends and social security reform," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 144-198, January.
  2. Haan, Peter & Prowse, Victoria L., 2011. "Longevity, Life-Cycle Behavior and Pension Reform," IZA Discussion Papers 5858, Institute for the Study of Labor (IZA).
  3. Krueger, Dirk & Ludwig, Alexander, 2006. "On the consequences of demographic change for rates of returns to capital, and the distribution of wealth and welfare," CFS Working Paper Series 2006/18, Center for Financial Studies (CFS).
  4. Shinichi Nishiyama & Kent Smetters, 2005. "Does Social Security Privatization Produce Efficiency Gains?," NBER Working Papers 11622, National Bureau of Economic Research, Inc.
  5. 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.
  6. Chéron, Arnaud & Hairault, Jean-Olivier & Langot, François, 2011. "Life Cycle Equilibrium Unemployment," CEPREMAP Working Papers (Docweb) 1103, CEPREMAP.
  7. Alexandra Rillaers & David de la Croix & Geraldine Mahieu, 2003. "How Should The Allocation Of Resources Adjust To The Baby Bust?," Working Papers. Serie AD 2003-27, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  8. Krusell, Per & Mukoyama, Toshihiko & Sahin, Aysegul, 2009. "Labor-Market Matching with Precautionary Savings and Aggregate Fluctuations," CEPR Discussion Papers 7429, C.E.P.R. Discussion Papers.
  9. Morten O. Ravn, 2008. "The Consumption-Tightness Puzzle," NBER Chapters, in: NBER International Seminar on Macroeconomics 2006, pages 9-63 National Bureau of Economic Research, Inc.
  10. Lucas, Deborah, 2007. "Comment on "Global demographic trends and social security reform" by Orazio Attanasio, Sagiri Kitao, and Giovanni Violante," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 199-204, January.
  11. Feldstein, Martin, 1990. "Imperfect annuity markets, unintended bequests, and the optimal age structure of social security benefits," Journal of Public Economics, Elsevier, vol. 41(1), pages 31-43, February.
  12. Rogerson, Richard, 1988. "Indivisible labor, lotteries and equilibrium," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 3-16, January.
  13. Patrick Aubert & Bruno Crépon, 2003. "La productivité des salariés âgés : une tentative d'estimation," Économie et Statistique, Programme National Persée, vol. 368(1), pages 95-119.
  14. repec:hal:journl:halshs-00270290 is not listed on IDEAS
  15. Arnaud Chéron & Jean-Olivier Hairault & François Langot, 2011. "Age-Dependent Employment Protection," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00623282, HAL.
  16. MICHEL, Philippe & PESTIEAU, Pierre, . "Retraite par répartition et âge de la retraite," CORE Discussion Papers RP -1441, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Den Haan, Wouter J. & Kaltenbrunner, Georg, 2009. "Anticipated growth and business cycles in matching models," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 309-327, April.
  18. David, DE LA CROIX & Frédéric DOCQUIER & Philippe, LIEGEOIS, 2007. "Income Growth in the 21st century : forecasts with an overlapping generations model," Discussion Papers (ECON - Département des Sciences Economiques) 2007029, Université catholique de Louvain, Département des Sciences Economiques.
  19. Ríos-Rull José-Víctor, 2001. "Population Changes and Capital Accumulation: The Aging of the Baby Boom," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(1), pages 1-48, May.
  20. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2002. "Vintage Human Capital, Demographic Trends, and Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 104(2), pages 340-375, June.
  21. Rios-Rull, Jose-Victor, 1996. "Life-Cycle Economies and Aggregate Fluctuations," Review of Economic Studies, Wiley Blackwell, vol. 63(3), pages 465-89, July.
  22. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
  23. Jean-Olivier Hairault & François Langot, 2008. "Inequality and Social Security Reforms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270290, HAL.
  24. Jonathan Gruber & David Wise, 2005. "Social Security Programs and Retirement around the World: Fiscal Implications, Introduction and Summary," NBER Working Papers 11290, National Bureau of Economic Research, Inc.
  25. Gregory de Walque & Olivier Pierrard & Henri Sneessens & Raf Wouters, 2009. "Sequential bargaining in a New Keynesian model with frictional unemployment and staggered wage negotiation," Working Paper Research 157, National Bank of Belgium.
  26. Ben J. Heijdra & Ward E. Romp, 2007. "Retirement, Pensions, and Ageing," CESifo Working Paper Series 1974, CESifo Group Munich.
  27. Chéron, Arnaud & Hairault, Jean-Olivier & Langot, François, 2008. "Age-Dependent Employment Protection," IZA Discussion Papers 3851, Institute for the Study of Labor (IZA).
  28. Laurence J. Kotlikoff & Jagadeesh Gokhale, 1991. "Estimating a firm's age-productivity profile using the present value of workers' earnings," Working Paper 9119, Federal Reserve Bank of Cleveland.
  29. Andrea Bassanini, 2010. "Inside the perpetual-motion machine: cross-country comparable evidence on job and worker flows at the industry and firm level -super-†," Industrial and Corporate Change, Oxford University Press, vol. 19(6), pages 2097-2134, December.
  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. Giannelli, Gianna Claudia & Mangiavacchi, Lucia & Piccoli, Luca, 2010. "GDP and the Value of Family Caretaking: How Much Does Europe Care?," IZA Discussion Papers 5046, Institute for the Study of Labor (IZA).
  32. 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, August.
  33. Jean-Olivier Hairault & Francois Langot & Thepthida Sopraseuth, 2010. "Distance to Retirement and Older Workers' Employment: The Case for Delaying the Retirement Age," Journal of the European Economic Association, MIT Press, vol. 8(5), pages 1034-1076, 09.
  34. Tripier, Fabien, 2004. "Can the labor market search model explain the fluctuations of allocations of time?," Economic Modelling, Elsevier, vol. 21(1), pages 131-146, January.
  35. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February.
  36. Börsch-Supan, Axel & Ludwig, Alexander & Winter, Joachim, 2002. "Aging and International Capital Flows," Sonderforschungsbereich 504 Publications 02-27, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  37. Hairault, Jean-Olivier & Langot, Francois, 2008. "Inequality and social security reforms," Journal of Economic Dynamics and Control, Elsevier, vol. 32(2), pages 386-410, February.
  38. Juan C. Conesa & Dirk Krueger, 1999. "Social Security Reform with Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(4), pages 757-795, October.
  39. Azariadis, Costas & Bullard, James & Ohanian, Lee, 2004. "Trend-reverting fluctuations in the life-cycle model," Journal of Economic Theory, Elsevier, vol. 119(2), pages 334-356, December.
  40. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  41. Javier Diaz-Gimenez & Julian Diaz-Saavedra, 2009. "Delaying Retirement in Spain," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 147-167, January.
  42. Johnson, Richard W & Neumark, David, 1996. "Wage Declines among Older Men," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 740-48, November.
  43. Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-83, June.
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:cor:louvrp:-2495. 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: (Alain GILLIS)

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.