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Life-Cycle Unemployment, Retirement and Parametric Pension Reform

  • Keuschnigg, Christian

    ()

  • Fisher, Walter

    ()

This paper investigates the consequences of pension reform for life-cycle unemployment and retirement. We find that (i) improving actuarial fairness in pension assessment not only boosts old age participation but also reduces unemployment among prime age workers and raises welfare; (ii) strengthening the tax benefit link boosts life-cycle labor supply on all margins and welfare; (iii) excluding unemployment benefits from the pension assessment base reduces unemployment, encourages later retirement and boosts efficiency; and (iv) extending the calculation period favors employment of young workers, might possibly lead to more unemployment among older ones, encourages postponed retirement and most likely yields positive welfare gains.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/econwp/EWP-1119.pdf
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Paper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1119.

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Length: 38 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:usg:econwp:2011:19
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  1. Alessandro Cigno, 2006. "Is there a Social Security Tax Wedge?," CESifo Working Paper Series 1772, CESifo Group Munich.
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  4. Gonzalo Reyes Hartley & Jan C Van Ours & Milan Vodopivec, 2010. "Incentive Effects of Unemployment Insurance Savings Accounts: Evidence from Chile," Working Papers 40, Superintendencia de Pensiones, revised Feb 2010.
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  25. Calvo, Guillermo A & Obstfeld, Maurice, 1988. "Optimal Time-Consistent Fiscal Policy with Finite Lifetimes," Econometrica, Econometric Society, vol. 56(2), pages 411-32, March.
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  33. Bovenberg, A.L. & Hansen, M. & Sorensen, P.B., 2008. "Individual savings accounts for social insurance : Rationale and alternative designs," Other publications TiSEM 72e236b0-ad63-4bea-a314-6, Tilburg University, School of Economics and Management.
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