Dangerous flexibility - retirement reforms reconsidered

Börsch-Supan, Axel ; Bucher-Koenen, Tabea ; Kutlu-Koc, Vesile ; Goll, Nicolas

DOI: https://doi.org/10.2139/ssrn.2967356
URL: http://mea.mpisoc.mpg.de/uploads/user_mea_discussi...
Additional URL: https://ssrn.com/abstract=2967356
Document Type: Working paper
Year of publication: 2017
The title of a journal, publication series: MEA Discussion Papers
Volume: 03-2017
Place of publication: München
Publishing house: Munich Center for the Economics of Aging
Publication language: English
Institution: Business School > Finanzmärkte (Bucher-Koenen 2019-)
Subject: 300 Social sciences, sociology, anthropology
330 Economics
Abstract: Flexible retirement is supposed to increase labor supply of older workers without touching the third rail of pension politics, the highly unpopular increase of the retirement age. While this may have intuitive appeal, this paper shows that it might be wishful thinking. Economic theory tells us that flexible retirement policies can have a zero or positive effect on labor force participation while the effect on hours worked can be positive or negative depending on the distribution of leisure preferences. Thus, the overall effect is ex ante unclear. Empirical results from nine OECD countries show that the effect on labor force participation is ex post small and positive while the effect on hours worked is negative. Overall, there is no evidence of the desired positive effect on total labor supply, rather, we see evidence of a dangerous decline in total labor supply. We conclude that the flexibility reforms enacted so far have failed to increase old-age labor supply and delineate several alternative options to achieve this aim.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.

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