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Growth, PAYG pension systems crisis and mandatory age of retirement

  • Luciano Fanti

Since in many countries - plagued by low fertility - significant increases of the mandatory retirement age have been recently introduced with the declared objective to sustain PAYG pension budgets, then in this paper we investigate whether and how such boosts are effective. It is shown - in the basic two-period overlapping generations model of endogenous growth, which is maybe the toy-model most used for pension policy analyses - that the postponement of the retirement age is always harmful for growth and even for pension payments. Therefore this result suggests that the effects of boosts of mandatory retirement ages for sustaining PAYG pension budgets may not be warranted.

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Paper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2012/153.

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Date of creation: 01 Sep 2012
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Handle: RePEc:pie:dsedps:2012/153
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  1. Luciano Fanti & Luca Spataro, 2008. "Poverty traps and intergenerational transfers," International Tax and Public Finance, Springer, vol. 15(6), pages 693-711, December.
  2. CASAMATTA, Georges & CREMER, Helmuth & PESTIEAU, Pierre, . "Voting on pensions with endogenous retirement age," CORE Discussion Papers RP 1754, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. J. Ignacio Conde-Ruiz & Vincenzo Galasso, . "The Macroeconomic of Early Retirement," Working Papers 194, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. repec:cup:cbooks:9780521806428 is not listed on IDEAS
  5. Tito Boeri & Axel Börsch-Supan & Guido Tabellini, 2001. "Would you like to shrink the welfare state? A survey of European citizens," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 7-50, 04.
  6. Fanti, Luciano & Gori, Luca, 2010. "Increasing PAYG pension benefits and reducing contribution rates," Economics Letters, Elsevier, vol. 107(2), pages 81-84, May.
  7. Bertrand Crettez & Patricia Le Maitre, 2002. "Optimal age of retirement and population growth," Journal of Population Economics, Springer, vol. 15(4), pages 737-755.
  8. repec:ebl:ecbull:v:10:y:2008:i:2:p:1-8 is not listed on IDEAS
  9. Luciano Fanti & Luca Gori, 2009. "Longevity, fertility and PAYG pension systems sustainability," Discussion Papers 2009/77, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  10. Luca Gori & Luciano Fanti, 2008. "Longevity and PAYG pension systems sustainability," Economics Bulletin, AccessEcon, vol. 10(2), pages 1-8.
  11. Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-83, June.
  12. repec:cup:cbooks:9780521001151 is not listed on IDEAS
  13. Momota, Akira, 2003. "A retirement decision in the presence of a social security system," Journal of Macroeconomics, Elsevier, vol. 25(1), pages 73-86, March.
  14. Juan Lacomba & Francisco Lagos, 2006. "Population aging and legal retirement age," Journal of Population Economics, Springer, vol. 19(3), pages 507-519, July.
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