Working less for longer: unintended effects of longevity adjustment of retirement age

Svend E. Hougaard Jensen (), Thorsteinn Sigurdur Sveinsson () and Miguel Sousa Duarte ()
Additional contact information
Svend E. Hougaard Jensen: Copenhagen Business School
Thorsteinn Sigurdur Sveinsson: Central Bank of Iceland
Miguel Sousa Duarte: Copenhagen Business School

International Tax and Public Finance, 2025, vol. 32, issue 4, No 5, 1076-1105

Abstract: Abstract Using a standard macro model with overlapping generations in the manner of Blanchard–Yaari, we show that by broadening the labour supply on the extensive margin through longevity adjustment of the statutory retirement age, labour supply is likely to decrease on the intensive margin. However, this backlash effect depends on the specific design of the pension system. It is significantly higher under a pay-as-you-go scheme with fixed benefits compared to a pay-as-you-go scheme with fixed contributions and a fully funded scheme based on voluntary savings. The findings have implications for responses to the fiscal and macroeconomic challenges raised by an ageing population.

Keywords: Demographic change; Pension reform; Retirement; Labour supply (search for similar items in EconPapers)
JEL-codes: E21 H55 J21 J26 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10797-024-09862-9 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:32:y:2025:i:4:d:10.1007_s10797-024-09862-9

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2

DOI: 10.1007/s10797-024-09862-9

Access Statistics for this article

International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf

More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().