Reform and backlash to reform : economic effects of ageing and retirement policy
Using a stochastic general equilibrium model with overlapping generations, this paper studies (i) the effects on both extensive and intensive labor supply responses to changes in fertility rates, and (ii) the potential of a retirement reform to mitigate the effects of fertility changes on labor supply. In order to neutralize the effects on effective labor supply of a fertility decline, a retirement reform, designed to increase labor supply at the extensive margin, is found to simultaneously reduce labor supply at the intensive margin. This backlash to retirement reform requires the statutory retirement age to increase more than proportionally to fertility changes in order to compensate for endogenous responses of the intensity of labor supply. The robustness of this result is checked against alternative model specifications and calibrations relevant to an economic region such as Europe.
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- Alexandra Rillaers & David de la Croix & Geraldine Mahieu, 2003.
"How Should The Allocation Of Resources Adjust To The Baby Bust?,"
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- DE LA CROIX, David & MAHIEU, GÃ©raldine & RILLAERS, Alexandra, . "How should the allocation of resources adjust to the baby bust?," CORE Discussion Papers RP 1741, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- de la Croix, David & Mahieu, Géraldine & Rillaers, Alexandra, 2000. "How should retirement policy adjust to the baby bust ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Axel H. Boersch-Supan & Alexander Ludwig, 2010.
"Old Europe ages: Reforms and Reform Backlashes,"
NBER Working Papers
15744, National Bureau of Economic Research, Inc.
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