Equilibrium Unemployment and Retirement
As a preliminary step, we first provide some new empirical evidence that labor market conditions affect retirement decisions at the individual level: unemployed people are more likely to retire. Our main objective in this paper is then to propose an equilibrium unemployment approach to retirement decisions that allows us to unveil the factors which explain why unemployed workers choose to retire earlier and the conditions under which this behavior is optimal. Two main conclusions emerge: the retirement decision of unemployed workers depends on the labor-market frictions whereas that of employed workers does not; the existence of search externalities makes the retirement age of unemployed workers intrinsically suboptimal. Considering Social Security policy issues, we show that the complete elimination of the implicit tax on continued activity is not necessarily welfare-optimizing in a second best world where the labor market equilibrium suffers from distortions.
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- Pietro Garibaldi & Etienne Wasmer, 2005.
"Equilibrium Search Unemployment, Endogenous Participation, And Labor Market Flows,"
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- James Albrecht & Lucas Navarro & Susan Vroman, 2009.
"Efficiency in a Search and Matching Model with Endogenous Participation,"
ILADES-Georgetown University Working Papers
inv218, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
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"The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour,"
Review of Economic Studies,
Oxford University Press, vol. 72(2), pages 395-427.
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- Eric French, 2004. "The Effects of Health, Wealth and Wages on Labor Supply and Retirement Behavior," 2004 Meeting Papers 96, Society for Economic Dynamics.
- Gustman, Alan L. & Steinmeier, Thomas L., 2005.
"The social security early entitlement age in a structural model of retirement and wealth,"
Journal of Public Economics,
Elsevier, vol. 89(2-3), pages 441-463, February.
- Alan L. Gustman & Thomas L. Steinmeier, 2002. "The Social Security Early Entitlement Age in a Structural Model of Retirement and Wealth," Working Papers wp029, University of Michigan, Michigan Retirement Research Center.
- Alan L. Gustman & Thomas L. Steinmeier, 2002. "The Social Security Early Entitlement Age in a Structural Model of Retirement and Wealth," NBER Working Papers 9183, National Bureau of Economic Research, Inc.
- Jean-Olivier Hairault & Francois Langot & Thepthida Sopraseuth, 2010. "Distance to Retirement and Older Workers' Employment: The Case for Delaying the Retirement Age," Journal of the European Economic Association, MIT Press, vol. 8(5), pages 1034-1076, 09.
- Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
- Lars Ljungqvist & Thomas J. Sargent, 2008. "Two Questions about European Unemployment," Econometrica, Econometric Society, vol. 76(1), pages 1-29, 01.
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