Voluntary and involuntary retirement decision: does real wage rigidity affects the effectiveness of pension reforms ?
Arnaud Cheron (),
Fouad Khaskhoussi (),
Tarek Khaskhoussi and
Francois Langot ()
MPRA Paper from University Library of Munich, Germany
In this paper, we integrate the retirement deadline taking into account both labor demand and labor supply specificities. This approach reveals that firms' employment decisions play an active role in the early retirement decision. We show that, in a walrasian economy, social security reforms aimed at delaying the retirement age by introducing actuarially fair adjustments are particularly powerful to stimulate the employment of older workers. However, if real wages are rigid, two situations must be distinguished. First, if the wage is lower than its walrasian value, the separation date is determined by workers, fair adjustments would push back the retirement age. In contrast, when the wage exceeds its walrasian rate, the separation date is determined by firms. Trying to increase the rate of employment of older workers by introducing pension incentives seems to be an unattainable goal. Therefore, there is a good reason for focusing primarily on labor demand. In this case, it appears that paying a subsidy to firms is the best policy for attaining the optimal retirement age.
Keywords: Retirement age; Human capital investment; Real wage rigidity; Labor market reform (search for similar items in EconPapers)
JEL-codes: H55 H31 J26 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/9119/1/MPRA_paper_9119.pdf original version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:9119
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Schackstr. 4, D-80539 Munich, Germany. Contact information at EDIRC.
Series data maintained by Ekkehart Schlicht ().