Early Retirement and Social Security: A Long Term Perspective

J. Ignacio Conde-Ruiz, Vincenzo Galasso and Paola Profeta

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We provide a long term perspective on the individual retirement behavior and on the future of retirement. In a Markovian political economic theoretical framework, in which incentives to retire early are embedded, we derive a political equilibrium with positive social security contribution rates and early retirement. While aging has opposite economic and political effects on social security contributions, it may lead to postponing retirement -- by reducing the generosity of pension benefits -- unless the political effect leads to a large increase in contribution and hence higher benefits. Economic slowdowns, captured by a reduction in wage income in youth, will also induce workers to postpone retirement and to vote for less social security

Keywords: pensions; income effect; tax burden; politico-economic Markovian equilibrium (search for similar items in EconPapers)
JEL-codes: D72 H53 H55 (search for similar items in EconPapers)
Date: 2006-09-01
New Economics Papers: this item is included in nep-lab, nep-pbe, nep-pol and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Early Retirement and Social Security: A Long Term Perspective (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:165

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