IDEAS home Printed from https://ideas.repec.org/a/mhr/finarc/urnsici0015-2218(201209)683_252rtrsfr_2.0.tx_2-a.html
   My bibliography  Save this article

Reforming the Retirement Scheme: Flexible Retirement versus Legal Retirement Age

Author

Listed:
  • Juan A. Lacomba
  • Francisco M. Lagos

Abstract

We compare a social security system where people can retire at an age of their own choice with one in which there is a legal retirement age elected through a majority voting process. We show that individuals prefer a legal retirement age higher than the one they would choose in the flexible scheme. In spite of this, we show that when the legal retirement age significantly limits the retirement age of high-wage workers, a flexible scheme would improve the financing of the pension system. Finally, we show that even when pension benefits are higher with a legal retirement age, a flexible system might be implemented.

Suggested Citation

  • Juan A. Lacomba & Francisco M. Lagos, 2012. "Reforming the Retirement Scheme: Flexible Retirement versus Legal Retirement Age," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(3), pages 252-268, September.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201209)68:3_252:rtrsfr_2.0.tx_2-a
    DOI: 10.1628/001522108X653831
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/reforming-the-retirement-scheme-flexible-retirement-versus-legal-retirement-age-101628001522112x653831
    Download Restriction: Fulltext access is included for subscribers to the printed version.
    File URL: https://libkey.io/10.1628/001522108X653831?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2005. "Voting on Pensions with Endogenous Retirement Age," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(1), pages 7-28, January.
    2. Conde-Ruiz, J. Ignacio & Galasso, Vincenzo, 2004. "The macroeconomics of early retirement," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1849-1869, August.
    3. J. Ignacio Conde-Ruiz & Vincenzo Galasso, 2003. "Early Retirement," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 12-36, January.
    4. Juan Lacomba & Francisco Lagos, 2007. "Political election on legal retirement age," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(1), pages 1-17, July.
    5. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2000. "The Political Economy of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 503-522, September.
    6. Casamatta, Georges & Cremer, Helmuth & Pestieau, Pierre, 2000. "Political sustainability and the design of social insurance," Journal of Public Economics, Elsevier, vol. 75(3), pages 341-364, March.
    7. Juan Lacomba & Francisco Lagos, 2006. "Population aging and legal retirement age," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(3), pages 507-519, July.
    8. Vincent P. Crawford & David M. Lilien, 1981. "Social Security and the Retirement Decision," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(3), pages 505-529.
    9. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1.
    10. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
    11. John B. Burbidge & A. Leslie Robb, 1980. "Pensions and Retirement Behaviour," Canadian Journal of Economics, Canadian Economics Association, vol. 13(3), pages 421-437, August.
    12. repec:bla:scandj:v:102:y:2000:i:3:p:503-22 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Juan A. Lacomba & Francisco M. Lagos, 2009. "Reforming the retirement scheme: Flexible retirement vs. Legal retirement age," ThE Papers 09/01, Department of Economic Theory and Economic History of the University of Granada..
    2. Casamatta, G. & Batté, L., 2016. "The Political Economy of Population Aging," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 381-444, Elsevier.
    3. Ryo Arawatari & Tetsuo Ono, 2010. "Retirement and Social Security: A Political Economy Perspective," Discussion Papers in Economics and Business 10-04-Rev, Osaka University, Graduate School of Economics.
    4. Juan Lacomba & Francisco Lagos, 2009. "Defined contribution plan vs. defined benefits plan: reforming the legal retirement age," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 12(1), pages 1-11.
    5. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2005. "Voting on Pensions with Endogenous Retirement Age," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(1), pages 7-28, January.
    6. J. Ignacio Conde-Ruiz & Vincenzo Galasso & Paola Profeta, "undated". "The Evolution of Retirement," Working Papers 2005-03, FEDEA.
    7. Galasso, Vincenzo, 2008. "Postponing retirement: the political effect of aging," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2157-2169, October.
    8. Enrique Fatás & Juan A. Lacomba & Francisco M. Lagos & Ana I. Moro, 2008. "Experimental tests on consumption, savings and pensions," ThE Papers 08/14, Department of Economic Theory and Economic History of the University of Granada..
    9. Georges Casamatta & L. Batté, 2016. "The Political Economy of Population Aging," Post-Print hal-02520521, HAL.
    10. Juan Lacomba & Francisco Lagos, 2010. "Postponing the legal retirement age," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(3), pages 357-369, July.
    11. Ryo Arawatari & Tetsuo Ono, 2011. "Retirement and social security: the roles of self-fulfilling expectations and educational investments," Economics of Governance, Springer, vol. 12(4), pages 353-383, December.
    12. J. Ignacio Conde-Ruiz & Vincenzo Galasso & Paola Profeta, 2005. "Early Retirement and Social Security: A Long Term Perspective," CESifo Working Paper Series 1571, CESifo.
    13. Pestieau, P., 2001. "Are We Retiring Too Early?," Liege - Groupe d'Etude des Mathematiques du Management et de l'Economie 2001/03, UNIVERSITE DE LIEGE, Faculte d'economie, de gestion et de sciences sociales, Groupe d'Etude des Mathematiques du Management et de l'Economie.
    14. Conde-Ruiz, J. Ignacio & Galasso, Vincenzo, 2004. "The macroeconomics of early retirement," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1849-1869, August.
    15. repec:kap:iaecre:v:12:y:2006:i:4:p:530-539 is not listed on IDEAS
    16. Enrique Fatas & Juan A. Lacomba & Francisco Lagos, 2007. "An Experimental Test On Retirement Decisions," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 602-614, July.
    17. Даниелян, Владимир, 2016. "Детерминанты Пенсионного Возраста: Обзор Исследований [Determinants of Retirement Age: A Review of Research]," MPRA Paper 73865, University Library of Munich, Germany.
    18. Ryo Arawatari & Tetsuo Ono, 2011. "Old-age Social Security vs. Forward Intergenerational Public Goods Provision," Discussion Papers in Economics and Business 11-26-Rev, Osaka University, Graduate School of Economics, revised Apr 2012.
    19. Helmuth Cremer & Jean‐Marie Lozachmeur & Pierre Pestieau, 2008. "Social Security And Retirement Decision: A Positive And Normative Approach," Journal of Economic Surveys, Wiley Blackwell, vol. 22(2), pages 213-233, April.
    20. Tetsuo Ono, 2016. "Marital Status and Derived Pension Rights: A Political Economy Model of Public Pensions with Borrowing Constraints," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(1), pages 99-124, February.
    21. Juan Lacomba & Francisco Lagos, 2006. "Reinforcing the Link Between Contributions and Pensions: The Effect of the Population Aging," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 12(4), pages 530-539, November.

    More about this item

    Keywords

    social security; flexible retirement; legal retirement age;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mhr:finarc:urn:sici:0015-2218(201209)68:3_252:rtrsfr_2.0.tx_2-a. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/fa .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.