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Social Insurance and Retirement: A Cross-Country Perspective


  • 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.

Suggested Citation

  • Laun, Tobias & Wallenius, Johanna, 2013. "Social Insurance and Retirement: A Cross-Country Perspective," Working Paper Series, Center for Fiscal Studies 2013:6, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uufswp:2013_006

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    References listed on IDEAS

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    Cited by:

    1. Dominik Sachs & Sebastian Findeisen, 2016. "Optimal Financial Aid Policies for Students," 2016 Meeting Papers 1421, Society for Economic Dynamics.
    2. repec:red:issued:17-49 is not listed on IDEAS
    3. Zhigang Feng & Kai Zhao, 2015. "Employment-Based Health Insurance and Aggregate Labor Supply," Working papers 2015-11, University of Connecticut, Department of Economics.
    4. Findeisen, Sebastian & Sachs, Dominik, 2015. "Designing efficient college and tax policies," Working Papers 15-09, University of Mannheim, Department of Economics.
    5. repec:eee:eecrev:v:101:y:2018:i:c:p:512-527 is not listed on IDEAS
    6. Jochem de Bresser & Raquel Fonseca & Pierre-Carl Michaud, 2016. "Retirement Behavior in the U.S. and Europe," Cahiers de recherche 1609, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    7. Christian vom Lehn & Eric Fisher & Aspen Gorry, . "Male Labor Supply and Generational Fiscal Policy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.

    More about this item


    Life cycle; Retirement; Disability insurance; Health;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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