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Pension Benefits, Labour Market Institutions, and Unemployment

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  • Antonis Adam

Abstract

. As argued by Summers et al. (Quarterly Journal of Economics 1993; 108: 385–411) and Cigno (‘Is There a Social Security Tax Wedge?’, CESifo Working Paper No. 1772, 2006) public old‐age pension benefits may work as a wage‐moderating device, thereby lessening the distorting effects of labour taxation on unemployment. An implication of this argument is that there should be a negative relationship between the generosity of the pension system and the unemployment rate, for those countries where there is a strong link between individual contributions to the pension system and benefits, i.e. countries with Bismarckian pension systems. We test this hypothesis using a panel of 20 OECD countries for the time period of 1960–2004. The paper also provides evidence on the unemployment effects of various labour market institutions.

Suggested Citation

  • Antonis Adam, 2007. "Pension Benefits, Labour Market Institutions, and Unemployment," LABOUR, CEIS, vol. 21(4‐5), pages 595-610, December.
    • Handle: RePEc:bla:labour:v:21:y:2007:i:4-5:p:595-610
    DOI: 10.1111/j.1467-9914.2007.00381.x
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    References listed on IDEAS

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    1. Cigno, Alessandro, 2008. "Is there a social security tax wedge," Labour Economics, Elsevier, vol. 15(1), pages 68-77, February.
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    Cited by:

    1. Fisher, Walter H. & Keuschnigg, Christian, 2011. "Life-Cycle Unemployment, Retirement, and Parametric Pension Reform," Economics Series 267, Institute for Advanced Studies.

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