Reform and Backlash to Reform

Economic Effects of Ageing and Retirement Policy

Svend E. Hougaard Jensen, Ole Hagen Jørgensen

Publikation: Working paperForskning

Resumé

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.
OriginalsprogEngelsk
Udgivelses stedWashington
UdgiverWorld Bank Publications
Antal sider19
DOI
StatusUdgivet - 2010

Emneord

  • Policy Research
  • Labour supply
  • Welfare reform
  • Fertility rates
  • Retirement age
  • Overlapping generation model
  • General Equilibrium
  • Fertility Decline
  • Overlapping Generations Model

Citer dette

Hougaard Jensen, Svend E. ; Hagen Jørgensen, Ole. / Reform and Backlash to Reform : Economic Effects of Ageing and Retirement Policy . Washington : World Bank Publications, 2010.
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Reform and Backlash to Reform : Economic Effects of Ageing and Retirement Policy . / Hougaard Jensen, Svend E.; Hagen Jørgensen, Ole.

Washington : World Bank Publications, 2010.

Publikation: Working paperForskning

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N2 - 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.

AB - 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.

KW - Policy Research

KW - Labour supply

KW - Welfare reform

KW - Fertility rates

KW - Retirement age

KW - Overlapping generation model

KW - General Equilibrium

KW - Fertility Decline

KW - Overlapping Generations Model

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