Open AccessPension reform, employment by age, and long-run growth
Author(s) -
Tim Buyse,
Freddy Heylen,
Renaat Van de Kerckhove
Publication year - 2012
Publication title -
journal of population economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.894
H-Index - 71
eISSN - 1432-1475
pISSN - 0933-1433
DOI - 10.1007/s00148-012-0416-x
Subject(s) - pension , economics , overlapping generations model , labour economics , social policy , pension system , growth model , retirement age , demographic economics , macroeconomics , market economy , finance
We study the effects of pension reform on hours worked by three active generations, education of the young, the retirement decision of older workers, and aggregate growth in a four-period OLG model. The model explains important facts well for many OECD countries. Our simulation results prefer an intelligent pay-as-you-go system above a fully funded private system. Positive effects on employment and growth are the strongest when the pay-as-you-go system includes a tight link between individual labor income and the pension, and when it attaches a high weight to labor income earned as an older worker to compute the pension assessment base. © 2012 Springer-Verlag
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