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Social Insurance and Retirement: A Cross-Country Perspective

Listed author(s):
  • Laun, Tobias

    ()

    (Uppsala Center for Fiscal Studies)

  • Wallenius, Johanna

    ()

    (Department of Economics, Stockholm School of Economics)

In this paper we study the role of social insurance, namely old-age pensions, disability insurance and healthcare, in accounting for the differing labor supply patterns of older individuals across OECD countries. To this end, we develop a life cycle model of labor supply and health with heterogeneous agents. The key features of the framework are: (1) people choose when to stop working, and when/if to apply for disability and pension benefits, (2) the awarding of disability insurance benefits is imperfectly correlated with health, and (3) people can partially insure against health shocks by investing in health, the cost of which is dependent on health insurance coverage. We find that the incentives faced by older workers differ hugely across countries. In fact, based solely on differences in social insurance programs, the model predicts even more cross-country variation in the employment rates of people aged 55-64 than we observe in the data.

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File URL: http://www.nek.uu.se/Pdf/20136ucfs.pdf
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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Fiscal Studies with number 2013:6.

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Length: 37 pages
Date of creation: 03 May 2013
Publication status: Published as Laun, Tobias and Johanna Wallenius, 'Social Insurance and Retirement: A Cross-Country Perspective' in Review of Economic Dynamics, 2016, pages 72-92.
Handle: RePEc:hhs:uufswp:2013_006
Contact details of provider: Postal:
Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden

Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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  9. Eric French and John Jones, 2001. "The Effects of Health Insurance and Self-Insurance on Retirement Behavior," Computing in Economics and Finance 2001 24, Society for Computational Economics.
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  20. Lee E. Ohanian & Andrea Raffo & Richard Rogerson, 2006. "Long-term changes in labor supply and taxes: evidence from OECD countries, 1956-2004," Research Working Paper RWP 06-16, Federal Reserve Bank of Kansas City.
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  23. Johansson Per & Laun Lisa & Laun Tobias, 2014. "Screening Stringency in the Disability Insurance Program," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(3), pages 1-19, July.
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