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Life-Cycle Unemployment, Retirement, and Parametric Pension Reform

  • Fisher, Walter H.

    (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)

  • Keuschnigg, Christian

    (University of St. Gallen (FGN-HSG), CEPR, CESifo and Netspar, Switzerland)

This paper investigates the consequences of pension reform for life-cycle unemployment and retirement. We find that (i) improving actuarial fairness in pension assessment not only boosts old age participation but also reduces unemployment among prime age workers and raises welfare; (ii) strengthening the tax benefit link boosts life-cycle labor supply on all margins and welfare; (iii) excluding unemployment benefits from the pension assessment base reduces unemployment, encourages later retirement and boosts efficiency; and (iv) extending the calculation period favors employment of young workers, might possibly lead to more unemployment among older ones, encourages postponed retirement and most likely yields positive welfare gains.

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File URL: http://www.ihs.ac.at/publications/eco/es-267.pdf
File Function: First version, 2011
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Paper provided by Institute for Advanced Studies in its series Economics Series with number 267.

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Length: 33 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:ihs:ihsesp:267
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