Reform and Backlash to Reform : Economic Effects of Ageing and Retirement Policy
Using a stochastic general equilibrium model with overlapping generations, this paper studies (i) the effects on both extensive and intensive labor supply responses to changes in fertility rates, and (ii) the potential of a retirement reform to mit...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101109093239 http://hdl.handle.net/10986/3952 |
| Summary: | Using a stochastic general equilibrium
model with overlapping generations, this paper studies (i)
the effects on both extensive and intensive labor supply
responses to changes in fertility rates, and (ii) the
potential of a retirement reform to mitigate the effects of
fertility changes on labor supply. In order to neutralize
the effects on effective labor supply of a fertility
decline, a retirement reform, designed to increase labor
supply at the extensive margin, is found to simultaneously
reduce labor supply at the intensive margin. This backlash
to retirement reform requires the statutory retirement age
to increase more than proportionally to fertility changes in
order to compensate for endogenous responses of the
intensity of labor supply. The robustness of this result is
checked against alternative model specifications and
calibrations relevant to an economic region such as Europe. |
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