Postponing Retirement: the Political Push of Aging

Vincenzo Galasso

No 5777, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Conventional economic wisdom suggests because of the aging process, social security systems will have to be retrenched. In particular, retirement age will have to be largely increased. Yet, is this policy measure feasible in OECD countries? Since the answer belongs mainly to the realm of politics, I evaluate the political feasibility of postponing retirement under aging in France, Italy, the UK, and the US. Simulations for the year 2050 steady state demographic, economic and political scenario suggest that retirement age will be postponed in all countries, while the social security contribution rate will rise in all countries, but Italy. The political support for increasing the retirement age stems mainly from the negative income effect induced by aging, which reduces the profitability of the existing social security system, and thus the individuals net social security wealth.

Keywords: Political equilibria; Aging; Postponing retirement (search for similar items in EconPapers)
JEL-codes: D72 H5 H53 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-eec, nep-pbe and nep-pol
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Working Paper: Postponing Retirement: the Political Push of Aging (2006)
Working Paper: Postponing Retirement: the Political Push of Aging (2006)
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