Labor Supply and Retirement Policy in an Overlapping Generations Model with Stochastic Fertility

Using a stochastic general equilibrium model with overlapping generations, this paper studies a policy rule for the retirement age aiming at offsetting the effects on the supply of labor following fertility changes. The authors find that the retirement age should increase more than proportionally to the direct fall in labor supply caused by a fall in fertility. The robustness of this result is checked against alternative model specifications and parameter values. The efficacy of the policy rule depends crucially on the link between the preference for leisure and the response of the intensive margin of labor supply to changes in the statutory retirement age. The model has subsequently been calibrated for Brazil by Jorgensen (2010), in the context of the Brazil Aging Study.

Bibliographic Details

Main Authors:	Jorgensen, Ole Hagen, Jensen, Svend E. Hougaard
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	2010-07-01
Subjects:	AGGREGATE INCOME, ALLOCATION OF RESOURCES, BABIES, BABY, BABY BOOM, BUSINESS CYCLE, CAPITAL INVESTMENT, CHANGES IN FERTILITY, CONSUMPTION INCREASES, CONTRIBUTION RATE, DEBT, DECLINE IN FERTILITY, DECLINES IN FERTILITY, DEMOGRAPHIC TRENDS, DEPENDENCY RATIO, DEPENDENCY RATIOS, DISCOUNT RATE, DOWNWARD PRESSURE, EARLY RETIREMENT, ECONOMIC DECISIONS, ECONOMIC GROWTH, ECONOMIC IMPLICATIONS, ECONOMIC THEORY, ELASTICITY, ELASTICITY OF SUBSTITUTION, ELDERLY, ENDOGENOUS VARIABLES, EXOGENOUS SHOCK, EXOGENOUS VARIABLE, FERTILITY, FERTILITY DECLINE, FERTILITY RATE, FERTILITY RATES, FUTURE RESEARCH, GENERAL EQUILIBRIUM, GROSS RETURN, GROWTH RATE, HUMAN CAPITAL, IMPERFECT COMPETITION, INDEXATION, INNOVATIONS, LABOR ECONOMICS, LABOR FORCE, LABOR FORCES, LABOR SUPPLY, LABOUR, LONGEVITY ADJUSTMENT, LOW FERTILITY, LOWER FERTILITY, MARKET EQUILIBRIUM, NUMBER OF CHILDREN, NUMBER OF WORKERS, OPPORTUNITY COST, OPTIMIZATION, OVERLAPPING GENERATIONS MODEL, PAYROLL TAX, PENSION, PENSION CONTRIBUTION, PENSION CONTRIBUTIONS, PENSION SYSTEM, PENSION SYSTEMS, POLICY FRAMEWORK, POLICY MAKERS, POLICY RESEARCH, POLICY RESEARCH WORKING PAPER, POLICY RESPONSE, POLITICAL ECONOMY, POPULATION DYNAMICS, POPULATION GROWTH, POPULATION GROWTH RATE, PRODUCTIVITY, PROGRESS, RATE OF GROWTH, REAL WAGES, REPLACEMENT RATE, RESPECT, RETIREES, RETIREMENT, RETIREMENT AGE, RETIREMENT PERIOD, RETIREMENT PERIODS, RETIREMENT POLICY, SOCIAL SECURITY, SOCIAL SECURITY REFORM, TAX RATE, TAXATION, UTILITY FUNCTION, WAGE RATE, WEALTH, WORKER, WORKERS, WORKING HOURS,
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_20100727134920 http://hdl.handle.net/10986/3867
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