Abstract
Using a standard macro model with overlapping generations in the manner of Blanchard-Yaari, we show that by broadening the labour supply on the extensive margin through longevity adjustment of the statutory retirement age, labour supply is likely to decrease on the intensive margin. However, this backlash effect depends on the specific design of the pension system. It is significantly higher under a pay-as-you-go scheme with fixed benefits compared to a pay-as-you-go scheme with fixed contributions and a fully funded scheme based on voluntary savings. The findings have implications for responses to the fiscal and macroeconomic challenges raised by an ageing population.
Original language | English |
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Journal | International Tax and Public Finance |
Number of pages | 30 |
ISSN | 0927-5940 |
DOIs | |
Publication status | Published - 26 Sept 2024 |
Bibliographical note
Epub ahead of print. Published online: 26 September 2024.Keywords
- Demographic change
- Pension reform
- Retirement
- Labour supply