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Labor Market Search and Optimal Retirement Policy

Author

Listed:
  • Bhattacharya, Joydeep
  • Muligan, Casey
  • Reed, Robert R.

Abstract

A popular and long‐standing view is that social security is a means for young, unemployed people to “purchase” jobs from older workers. Can social security, by encouraging retirement and hence creating job vacancies for the young, improve the allocation of workers to jobs? Maybe, according to a standard model of labor market search, but public retirement programs currently pay the elderly substantially more than their jobs are worth. An important effect is that retirement reduces the value of other vacant jobs. Our results imply that recent reforms aimed at reducing retirement incentives are likely to improve labor market efficiency.

Suggested Citation

  • Bhattacharya, Joydeep & Muligan, Casey & Reed, Robert R., 2004. "Labor Market Search and Optimal Retirement Policy," ISU General Staff Papers 200410010700001191, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:200410010700001191
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    Cited by:

    1. Tiantian Dai & Hua Fan & Shenyi Jiang, 2025. "Labor Market Implications of Pension Reform: Analyzing Delayed Retirement Policies and Fiscal Adjustments in Aging Economies," Annals of Economics and Finance, Society for AEF, vol. 26(1), pages 247-280, May.
    2. Dai, Tiantian & Fan, Hua & Liu, Xiangbo & Ma, Chao, 2022. "Delayed retirement policy and unemployment rates," Journal of Macroeconomics, Elsevier, vol. 71(C).
    3. Bhattacharya, Joydeep & Reed, Robert R., 2003. "A positive theory of the income redistributive focus of social security," ISU General Staff Papers 200311260800001186, Iowa State University, Department of Economics.
    4. Mário Centeno & Márcio Corrêa, 2006. "Job Matching, Unexpected Obligations And Retirement Decisions," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 159, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. Hairault, Jean-Olivier & Langot, François & Zylberberg, André, 2015. "Equilibrium unemployment and retirement," European Economic Review, Elsevier, vol. 79(C), pages 37-58.
    6. J. García-Pérez & Alfonso Sánchez-Martín, 2015. "Fostering job search among older workers: the case for pension reform," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-34, December.
    7. repec:fgv:epgrbe:v:66:n:4:a:5 is not listed on IDEAS
    8. Bhattacharya, Joydeep & Reed, Robert R., 2002. "Age-specific employment policies," ISU General Staff Papers 200211050800001187, Iowa State University, Department of Economics.
    9. Maes, Marjan, 2008. "Does the dismantlement of early retirement schemes increase unemployment in Belgium?," Working Papers 2008/57, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    10. Joydeep Bhattacharya & Robert R. Reed, 2006. "Social Security and Intergenerational Redistribution," Contributions to Economic Analysis, in: Structural Models of Wage and Employment Dynamics, pages 183-213, Emerald Group Publishing Limited.
    11. Bhattacharya, Joydeep & Reed, Robert R., 2001. "Aging, unemployment, and welfare in a life-cycle model with costly labor market search," ISU General Staff Papers 200110010700001188, Iowa State University, Department of Economics.
    12. Coimbra, Leandro Willer P. & Ramos, Francisco de S., 2012. "Mecanismo de incentivo à renovação da mão-de-obra no mercado de trabalho face ao sistema previdenciário," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 66(4), December.

    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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