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Retirement in an overlapping generations model



    (Netherlands Bureau for Economic Policy analysis, Den Haag)


    (School of Economics, Sint-Aloysius, Brussels and Center for Economic Studies, University of Leuven)


With an overlapping generations model, Williamson and Jones [1983] demonstrated that the long-run savings ratio in the U.S. was not affected by the introduction and the reform of the unfunded social security system. This paper extends their model by including a production sector, endogenous labour supply and a wage profile. Simulations show that incorporating general equilibrium and (exogenous) leisure is sufficient to generate a declining savings ratio in the steady state. Reforms of the social security system are evaluated in welfare terms. The new features of the model may significantly change the sign and the magnitude of the welfare gains for a steady state generations.

Suggested Citation

  • Leon BETTENDORF & Guido PEPERMANS, 1997. "Retirement in an overlapping generations model," Discussion Papers (REL - Recherches Economiques de Louvain) 1997042, Universit√© catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:1997042

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    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions


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