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Early Retirement, Social Security, and Output Gap

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  • Julian Diaz Saavedra

    (Department of Economic Theory and Economic History, University of Granada.)

Abstract

We analyze two social security reforms aimed at increasing working lifetimes. The rst reform elim- inates early retirement provisions, while the second increases both the age of early eligibility and the normal retirement age. We nd that although both reforms increase the participation rates of older workers, the elimination of early retirement provisions reduces future social security imbalances if ben- e ts taken early are not reduced actuarially. Additionally, we nd that both reforms increase aggregate hours and output, although eciency gains derived from the elimination of the early retirement scheme are distant from previous estimates since labor supply could be less responsive. Finally, we also nd that the output gap brought about by the early retirement scheme may decrease in coming decades.

Suggested Citation

  • Julian Diaz Saavedra, 2014. "Early Retirement, Social Security, and Output Gap," ThE Papers 14/01, Department of Economic Theory and Economic History of the University of Granada..
    • Handle: RePEc:gra:wpaper:14/01
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Computable general equilibrium; social security reforms; macroeconomic e ects; retirement.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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