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Voluntary and involuntary retirement decision : does real wage rigidity affects the effectiveness of pension reforms ?

  • Cheron, Arnaud
  • Khaskhoussi, Fouad
  • Khaskhoussi, Tarek
  • Langot, François

In this paper, we integrate the retirement deadline taking into account both labor demand and labor supply specificities. This approach reveals that firms' employment decisions play an active role in the early retirement decision. We show that, in a walrasian economy, social security reforms aimed at delaying the retirement age by introducing actuarially fair adjustments are particularly powerful to stimulate the employment of older workers. However, if real wages are rigid, two situations must be distinguished. First, if the wage is lower than its walrasian value, the separation date is determined by workers, fair adjustments would push back the retirement age. In contrast, when the wage exceeds its walrasian rate, the separation date is determined by firms. Trying to increase the rate of employment of older workers by introducing pension incentives seems to be an unattainable goal. Therefore, there is a good reason for focusing primarily on labor demand. In this case, it appears that paying a subsidy to firms is the best policy for attaining the optimal retirement age.

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File URL: http://mpra.ub.uni-muenchen.de/9119/1/MPRA_paper_9119.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9119.

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Date of creation: 2004
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Handle: RePEc:pra:mprapa:9119
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  1. Jean-Olivier Hairault & François Langot & Thepthida Sopraseuth, 2005. "Inciter à différer le départ en retraite: une analyse en termes de courbe de Laffer," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270278, HAL.
  2. Antoine d’Autume, 2003. "Vieillissement et choix de l'âge de la retraite. Que peut nous dire le modèle à générations ?," Revue économique, Presses de Sciences-Po, vol. 54(3), pages 561-571.
  3. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  4. Langot, François & Moreno-Galbis, Eva, 2008. "Does the Growth Process Discriminate against Older Workers?," IZA Discussion Papers 3841, Institute for the Study of Labor (IZA).
  5. Philippe Michel & Pierre Pestieau, 2000. "Retraite par répartition et âge de la retraite," Revue Économique, Programme National Persée, vol. 51(1), pages 15-30.
  6. Patrick Aubert & Bruno Crépon, 2003. "La productivité des salariés âgés : une tentative d'estimation," Économie et Statistique, Programme National Persée, vol. 368(1), pages 95-119.
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