How should retirement policy adjust to the baby bust ?

David de la Croix, Géraldine Mahieu and Alexandra Rillaers
Additional contact information
Géraldine Mahieu: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS)
Alexandra Rillaers: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)

No 2001003, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: To cope with the observed drop in fertility, four policy options are generally considered : lowering pension benefits, increasing social security contributions, postponing retirement, and reducing public debt in advance. To assess the respective merits of these options, we analyze the optimal allocation of resources in an overlapping generations economy where old agents care about leisure. We characterize the decentralization of the optimum both when the retirement age is compulsory and when it results from a private decision. We conclude that the policy recommendation of postponing retirement is not robust to a wide class of preferences and technologies. In contrast, policies aimed at increasing capital through a reduction in public debt are more robust.

Keywords: pensions; fertility; debt; first-best policy; decentralization (search for similar items in EconPapers)
JEL-codes: E62 H55 O41 (search for similar items in EconPapers)
Pages: 28
Date: 2000-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://sites.uclouvain.be/econ/DP/IRES/2001-3.pdf (application/pdf)

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:ctl:louvir:2001003

Access Statistics for this paper

More papers in LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Virginie LEBLANC ().