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Social Security and Intergenerational Redistribution

  • Bhattacharya, Joydeep
  • Reed, Robert

Many countries around the world have large public pension programs with significant cross-cohort redistribution. This paper provides a rationale for such programs in a lifecycle framework with search and matching frictions in the labor market. In the model, public pension programs alter the age composition of the labor force by inducing the jobless elderly to retire. This improves the allocation of workers to jobs, raises firm entry and may also improve welfare. By requiring a long history of labor market attachment as a precondition to receiving benefits, these programs raise the future value of current employment for the young. This redistributes bargaining strength and income from the young to the old.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/p1841-2006-08-01.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12661.

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Date of creation: 01 Aug 2006
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Handle: RePEc:isu:genres:12661
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  1. Michele Boldrin & Sergi Jimenez-Martni & Franco Peracchi, 1997. "Social Security and Retirement in Spain," NBER Working Papers 6136, National Bureau of Economic Research, Inc.
  2. Hutchens, Robert, 1986. "Delayed Payment Contracts and a Firm's Propensity to Hire Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 4(4), pages 439-57, October.
  3. Sala-i-Martin, Xavier, 1994. "A Positive Theory of Social Security," CEPR Discussion Papers 1025, C.E.P.R. Discussion Papers.
  4. Pissarides, Christopher A, 1976. "Job Search and Participation," Economica, London School of Economics and Political Science, vol. 43(169), pages 33-49, February.
  5. Joydeep Bhattacharya & Casey B. Mulligan & Robert R. Reed III, 2001. "Labor Market Search and Optimal Retirement Policy," NBER Working Papers 8591, National Bureau of Economic Research, Inc.
  6. Davidson, Carl & Martin, Lawrence & Matusz, Steven, 1994. "Jobs and Chocolate: Samuelsonian Surpluses in Dynamic Models of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(1), pages 173-92, January.
  7. Robert Shimer, 1999. "The Impact of Young Workers on the Aggregate Labor Market," NBER Working Papers 7306, National Bureau of Economic Research, Inc.
  8. Gottschalk, Peter & Moffitt, Robert, 1999. "Changes in Job Instability and Insecurity Using Monthly Survey Data," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S91-126, October.
  9. Louis S. Jacobson & Robert J. LaLonde & Daniel Sullivan, 1992. "Earnings Losses of Displaced Workers," Upjohn Working Papers and Journal Articles 92-11, W.E. Upjohn Institute for Employment Research.
  10. Christopher J. O'Leary & Stephen A. Wandner, 2000. "Unemployment Compensation and Older Workers," Upjohn Working Papers and Journal Articles 00-61, W.E. Upjohn Institute for Employment Research.
  11. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, October.
  12. Michele Boldrin & Aldo Rustichini, 2000. "Political Equilibria with Social Security," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(1), pages 41-78, January.
  13. Sewin Chan & Ann Huff Stevens, 2002. "How Does Job Loss Affect the Timing of Retirement?," NBER Working Papers 8780, National Bureau of Economic Research, Inc.
  14. Peter Diamond & Jonathan Gruber, 1997. "Social Security and Retirement in the U.S," NBER Working Papers 6097, National Bureau of Economic Research, Inc.
  15. Black, Dan A, 1987. "The Social Security System, the Provision of Human Capital, and the Structure of Compensation," Journal of Labor Economics, University of Chicago Press, vol. 5(2), pages 242-54, April.
  16. Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
  17. Mulligan Casey B & Sala-i-Martin Xavier, 2004. "Political and Economic Forces Sustaining Social Security," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-56, May.
  18. Michael D. Hurd, 1993. "The Effect of Labor Market Rigidities on the Labor Force Behavior of Older Workers," NBER Working Papers 4462, National Bureau of Economic Research, Inc.
  19. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
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