Incentive Effects of Social Security on Labor Force Participation: Evidence in Germany and Across Europe

Axel Borsch-Supan

No 6780, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: All across Europe, old age labor force participation has declined dramatically during the last decades. This secular trend coincides with population aging. The European social security systems therefore face a double threat: retirees receive pensions for a longer time while there are less workers per retiree to shoulder the financial burden of the pension systems. This paper shows that a significant part of this problem is homemade: most European pension systems provide strong incentives to retire early. The correlation between the force of these incentives with old age labor force participation is strongly negative. The paper provides qualitative and econometric evidence for the strength of the incentive effects on old age labor supply across Europe and for the German public pension program.

JEL-codes: H55 J26 (search for similar items in EconPapers)
Date: 1998-11
New Economics Papers: this item is included in nep-ltv, nep-pbe and nep-pub
Note: AG PE
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Citations: View citations in EconPapers (11)

Published as American Economic Review (May 1999).
Published as Axel H. Boersch-Supan, 2001. "Incentive Effects of Social Security under an Uncertain Disability Option," NBER Chapters, in: Themes in the Economics of Aging, pages 281-310 National Bureau of Economic Research, Inc.
Published as Axel Börsch-Supan, 2000. "Incentive effects of social security on labor force participation: evidence in Germany and across Europe," Journal of Public Economics, vol 78(1-2), pages 25-49.

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