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Micro-Modelling of Retirement in Belgium

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  • Perelman, Sergio
  • Jousten, Alain
  • Dellis, Arnaud

Abstract

The present Paper studies the retirement incentives for elderly people in Belgium. We model the incentive structure built into the various public early retirement and retirement systems. First, we compute indicators of benefit entitlement such as the social security wealth. Then, we use three different incentive measures based on the notion of social security wealth. In a third step, we perform an empirical estimation of micro-econometric probit and option value models. From our exceptionally rich and broad database, we are able to compute a rather accurate measure of all individuals? pension wealth, as well as of the implicit tax rates the elderly workers face in case of delayed retirement. We find strong evidence of social security-based financial incentives inducing most workers to retire at the earliest possible stage. Finally, we use the derived parameter estimates from the probit models to simulate the responses to various policy changes.

Suggested Citation

  • Perelman, Sergio & Jousten, Alain & Dellis, Arnaud, 2001. "Micro-Modelling of Retirement in Belgium," CEPR Discussion Papers 2795, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2795
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    1. PESTIEAU, Pierre & STIJNS, Jean-Philippe, 1999. "Social security and retirement in Belgium," LIDAM Reprints CORE 1374, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
    3. Alain Jousten & Pierre Pestieau, 2002. "Labor Mobility, Redistribution, and Pension Reform in Europe," NBER Chapters, in: Social Security Pension Reform in Europe, pages 85-108, National Bureau of Economic Research, Inc.
    4. Sergio Perelman, 1981. "Evaluation patrimoniale des droits à la pension en Belgique," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 89, pages 25-52.
    5. Pierre Pestieau & Jean-Philippe Stijns, 1999. "Social Security and Retirement in Belgium," NBER Chapters, in: Social Security and Retirement around the World, pages 37-71, National Bureau of Economic Research, Inc.
    6. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
    7. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, March.
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    Cited by:

    1. Ignacio à lvarez & Natalia da Silva & à lvaro Forteza & Ianina Rossi, 2012. "Incentivos y patrones de retiro en Uruguay," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 27(2), pages 219-271.
    2. Deschryvere, Matthias, 2004. "Labour Force Behavior of Elderly Two Adult Households: Evidence from EU-countries," Discussion Papers 933, The Research Institute of the Finnish Economy.
    3. Anne-Lore Fraikin & Alain Jousten & Mathieu Lefebvre, 2018. "Social Security Incentives in Belgium: An Analysis of Four Decades of Change," NBER Chapters, in: Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, pages 43-78, National Bureau of Economic Research, Inc.
    4. Poteraj, Jarosław, 2007. "Systemy Emerytalne w Europie - Belgia [Pension systems in Europe - Belgium]," MPRA Paper 18415, University Library of Munich, Germany.
    5. Courtney C. Coile & Phillip B. Levine, 2007. "Labor Market Shocks and Retirement: Do Government Programs Matter?," NBER Chapters, in: Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), pages 1902-1919, National Bureau of Economic Research, Inc.
    6. Alain Jousten & Mathieu Lefebvre, 2017. "Work Capacity and Longer Working Lives in Belgium," NBER Chapters, in: Social Security Programs and Retirement around the World: The Capacity to Work at Older Ages, pages 35-58, National Bureau of Economic Research, Inc.
    7. Raphael Desmet & Alain Jousten & Sergio Perelman & Pierre Pestieau, 2007. "Microsimulation of Social Security Reforms in Belgium," NBER Chapters, in: Social Security Programs and Retirement around the World: Fiscal Implications of Reform, pages 43-82, National Bureau of Economic Research, Inc.
    8. Alain Jousten & Mathieu Lefebvre, 2013. "Retirement Incentives in Belgium: Estimations and Simulations Using SHARE Data," De Economist, Springer, vol. 161(3), pages 253-276, September.
    9. Jousten, Alain & Lefèbvre, Mathieu & Perelman, Sergio & Pestieau, Pierre, 2005. "Social Security in Belgium: Distributive Outcomes," IZA Discussion Papers 1486, Institute of Labor Economics (IZA).
    10. Alain Jousten & Mathieu Lefèbvre & Sergio Perelman & Pierre Pestieau, 2010. "The Effects of Early Retirement on Youth Unemployment: The Case of Belgium," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 47-76, National Bureau of Economic Research, Inc.
    11. Tânia Santos & Inmaculada Domínguez-Fabián, 2011. "Financial solvency of pension systems in the European Union," EcoMod2011 2916, EcoMod.
    12. Alain Jousten, 2003. "Départ à la retraite. Une perspective internationale," Revue Française d'Économie, Programme National Persée, vol. 18(1), pages 83-97.
    13. Marjan, MAES, 2008. "Financial and redistributive impact of reforming the old-age pension system in Belgium," Discussion Papers (ECON - Département des Sciences Economiques) 2008040, Université catholique de Louvain, Département des Sciences Economiques.
    14. Alain Jousten & Mathieu Lefebvre & Sergio Perelman, 2014. "Health Status, Disability, and Retirement Incentives in Belgium," NBER Chapters, in: Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, pages 179-209, National Bureau of Economic Research, Inc.
    15. Desmet, Raphaël & Jousten, Alain & Perelman, Sergio, 2005. "The Benefits of Separating Early Retirees from the Unemployed: Simulation Results for Belgian Wage Earners," IZA Discussion Papers 1571, Institute of Labor Economics (IZA).
    16. Jarosław Poteraj, 2007. "Pension Systems in Europe – Case of Belgium," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 1(2), June.
    17. Cremer, Helmuth & Lozachmeur, Jean-Marie & Pestieau, Pierre, 2004. "Social security, retirement age and optimal income taxation," Journal of Public Economics, Elsevier, vol. 88(11), pages 2259-2281, September.
    18. Mathieu Lefebvre & Sergio Perelman, 2016. "Social security wealth and household asset holdings: new evidence from Belgium," Working Papers of BETA 2016-38, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    19. Piekkola, Hannu & Deschryvere, Matthias, 2004. "Retirement Decisions and Option Values: Their Application Regarding Finland," Discussion Papers 951, The Research Institute of the Finnish Economy.
    20. Pestieau, P., 2001. "Are We Retiring Too Early?," Liege - Groupe d'Etude des Mathematiques du Management et de l'Economie 2001/03, UNIVERSITE DE LIEGE, Faculte d'economie, de gestion et de sciences sociales, Groupe d'Etude des Mathematiques du Management et de l'Economie.
    21. Pierre Pestieau, 2002. "Relever l'âge du départ à la retraite : une mesure nécessaire et équitable," Revue d'Économie Financière, Programme National Persée, vol. 68(4), pages 67-78.
    22. Mathieu Lefebvre & Kristian Orsini, 2012. "A structural model for early exit of older men in Belgium," Empirical Economics, Springer, vol. 43(1), pages 379-398, August.

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    More about this item

    Keywords

    Retirement; Ageing; Social security; Belgium;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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