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Early Retirement, Social Security, and Output Gap

  • Julian Diaz Saavedra


    (Department of Economic Theory and Economic History, University of Granada.)

We analyze two social security reforms aimed at increasing working lifetimes. The rst reform elim- inates early retirement provisions, while the second increases both the age of early eligibility and the normal retirement age. We nd that although both reforms increase the participation rates of older workers, the elimination of early retirement provisions reduces future social security imbalances if ben- e ts taken early are not reduced actuarially. Additionally, we nd that both reforms increase aggregate hours and output, although eciency gains derived from the elimination of the early retirement scheme are distant from previous estimates since labor supply could be less responsive. Finally, we also nd that the output gap brought about by the early retirement scheme may decrease in coming decades.

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Paper provided by Department of Economic Theory and Economic History of the University of Granada. in its series ThE Papers with number 14/01.

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Length: 33 pages
Date of creation: 09 Jan 2014
Date of revision:
Handle: RePEc:gra:wpaper:14/01
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  1. Peracchi, Franco & Jiménez-Martín, Sergi & Boldrin, Michele, 1997. "Social security and retirement in Spain," UC3M Working papers. Economics 6043, Universidad Carlos III de Madrid. Departamento de Economía.
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    ," MPRA Paper 19574, University Library of Munich, Germany, revised 01 Mar 2006.
  3. Conde-Ruiz, José Ignacio & Galasso, Vincenzo, 2000. "Early Retirement," CEPR Discussion Papers 2589, C.E.P.R. Discussion Papers.
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  7. Imrohoroglu, Ayse & Imrohoroglu, Selahattin & Joines, Douglas H, 1995. "A Life Cycle Analysis of Social Security," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(1), pages 83-114, June.
  8. Glomm, Gerhard & Jung, Juergen & Tran, Chung, 2009. "Macroeconomic implications of early retirement in the public sector: The case of Brazil," Journal of Economic Dynamics and Control, Elsevier, vol. 33(4), pages 777-797, April.
  9. J. Ignacio Conde-Ruiz & Vincenzo Galasso, . "The Macroeconomics of Early Retirement," Working Papers 2003-05, FEDEA.
  10. J. Ignacio Conde-Ruiz & Paola Profeta, 2007. "The Redistributive Design of Social Security Systems," Working Papers 2007-07, FEDEA.
  11. 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.
  12. Michele Boldrin & José Ignacio Conde-Ruiz & Javier Díaz Giménez, 2010. "Eppur si Muove! Spain: Growing without a Model," Working Papers 2010-12, FEDEA.
  13. Julian Diaz Saavedra, 2013. "Age-dependent Taxation, Retirement Behavior, and Work Hours Over the Life Cycle," ThE Papers 13/09, Department of Economic Theory and Economic History of the University of Granada..
  14. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
  15. Michele Boldrin & Juan J. Dolado & Juan F. Jimeno & Franco Peracchi, 1999. "The future of pensions in Europe," Economic Policy, CEPR;CES;MSH, vol. 14(29), pages 287-320, October.
  16. Hutchens, Robert, 1999. "Social Security Benefits and Employer Behavior: Evaluating Social Security Early Retirement Benefits as a Form of Unemployment Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 659-78, August.
  17. Raquel Vegas & Isabel Argimón & Marta Botella & Clara I. González, 2009. "Retirement behaviour and retirement incentives in Spain," Working Papers 0913, Banco de España;Working Papers Homepage.
  18. Conde-Ruiz, J. Ignacio & Gonzalez, Clara I., 2012. "Spain 2011 Pension Reform," Working Papers 2012-03, FEDEA.
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