Macroeconomic Implications of Early Retirement in the Public Sector: The Case of Brazil

Gerhard Glomm (), Juergen Jung and Chung Tran

No 2006-008, CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: In Brazil generous public sector pensions have induced civil servants to retire on average at age 55. In this paper we use an OLG model to assess the effects of such policy induced early retirement on capital accumulation and long-run income levels. We calibrate the model to data from Brazil and then conduct policy experiments changing the generosity of (early) public sector pensions. We find that the current generosity of public sector pensions which induces civil servants to retire 10 years prematurely (at age 55 rather than at age 65) is often associated with decreases in steady state output (GDP) of over 2 percent and welfare losses in the private sector of more than 1 percent of consumption.

Keywords: Early Retirement; Pension Reform; Capital Accumulation (search for similar items in EconPapers)
JEL-codes: H55 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006-09
New Economics Papers: this item is included in nep-mac and nep-pbe
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Citations: View citations in EconPapers (9)

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Journal Article: Macroeconomic implications of early retirement in the public sector: The case of Brazil (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:inu:caeprp:2006008

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