Equilibrium unemployment and retirement

Jean-Olivier Hairault, Francois Langot and Andre Zylberberg ()

European Economic Review, 2015, vol. 79, issue C, 37-58

Abstract: We first propose some new empirical evidence on the fact that the labor market conditions matter for the retirement decision at the individual level: we investigate whether unemployed workers retire before employed workers, other things being equal. Our main objective in this paper is then to propose an equilibrium unemployment approach to retirement decisions that allows us to derive the positive and normative features of retirement decisions when search and matching frictions are considered. Two main conclusions emerge: the retirement decision of unemployed workers depends on the labor-market frictions whereas that of employed workers does not; the existence of search externalities makes the retirement age of unemployed workers intrinsically suboptimal. Considering Social Security policy issues, we show that the complete elimination of the implicit tax on continued activity is not necessarily welfare-optimizing in a second best world where the labor market equilibrium suffers from distortions.

Keywords: Search; Matching; Retirement; Social Security (search for similar items in EconPapers)
JEL-codes: H55 J22 J26 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Equilibrium unemployment and retirement (2015)
Working Paper: Equilibrium unemployment and retirement (2015)
Working Paper: Equilibrium unemployment and retirement (2015)
Working Paper: Equilibrium Unemployment and Retirement (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:79:y:2015:i:c:p:37-58

DOI: 10.1016/j.euroecorev.2015.07.002

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