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| Author: | Heijdra, B.J. Romp, W.E. |
| Title: | Retirement, pensions, and ageing |
| Journal: | Journal of Public Economics
2009 : APR, VOL. 93:3-4, p. 586-604 |
| Index terms: | pensions retirement ageing demography open economy overlapping-generations models |
| Language: | eng |
| Abstract: | This paper explores the effects of demographic shocks and changes in the pension system (herein as: p-s/s.) on the macroeconomic performance of an advanced small open economy facing a given world interest rate. An overlapping-generations model is built including a realistic description of the mortality process. Individual agents choose their optimal retirement age, considering the time- and age profiles of wages, taxes, and the public p-s/s. The early retirement provision in most p-s/s. acts as a trap, inducing most workers to retire well before the normal retirement age. It is shown based on simulations that pension reform has to be drastic in order to have any effects on the retirement behaviour of workers. |
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