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Age Before Beauty? Productivity and Work vs. Seniority and Early Retirement

Author

Listed:
  • Giovanni Mastrobuoni

    (Collegio Carlo Alberto, CeRP and Netspar)

  • Filippo Taddei

    (Collegio Carlo Alberto and CeRP)

Abstract

We show how the age pro le of earnings, retirement rules and retirement behavior are tightly linked through the general equilibrium of the economy. Generous Social Security bene ts nanced by large Social Security taxes discourage human capital accumulation. In Social Security systems where Social Security bene ts prioritize redistribution less productive workers with lower levels of human capital tend to retire earlier. These out ows of workers from the labor force tend to generate wage pro les that are monotonically increasing over age and labor markets that display larger seniority premia. This paper theoretically rationalizes the links between retirement rules and the wage structures over the life cycle and uses data on European countries to show how social security taxes, the age pro le of earnings, and retirement behavior are related.

Suggested Citation

  • Giovanni Mastrobuoni & Filippo Taddei, 2011. "Age Before Beauty? Productivity and Work vs. Seniority and Early Retirement," CeRP Working Papers 120, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    • Handle: RePEc:crp:wpaper:120
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    References listed on IDEAS

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    Cited by:

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    2. International Monetary Fund, 2012. "Belgium: Selected Issues Paper," IMF Staff Country Reports 2012/056, International Monetary Fund.

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    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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