Macroeconomic Implications of Early Retirement in the Public Sector: The Case of Brazil

42 Pages Posted: 19 May 2006

See all articles by Gerhard Glomm

Gerhard Glomm

Indiana University Bloomington - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Juergen Jung

Towson University - Department of Economics

Chung Tran

Australian National University (ANU) - School of Economics

Date Written: September 6, 2006

Abstract

In Brazil, generous public sector pensions have induced civil servants to retire on average at age 55. In this paper we use an OLG model to assess the effects of such policy induced early retirement on capital accumulation and long-run income levels. We calibrate the model to data from Brazil and then conduct policy experiments changing the generosity of (early) public sector pensions. We find that changes in the generosity of public sector pensions which induce civil servants to retire 10 years prematurely (at age 55 rather than at age 65) are associated with decreases of steady state private sector output of over 4 percent.

Keywords: Early Retirement, Pension reform, Capital accumulation

JEL Classification: H55

Suggested Citation

Glomm, Gerhard and Jung, Juergen and Tran, Chung, Macroeconomic Implications of Early Retirement in the Public Sector: The Case of Brazil (September 6, 2006). CAEPR Working Paper No. 2006-008, Available at SSRN: https://ssrn.com/abstract=903389 or http://dx.doi.org/10.2139/ssrn.903389

Gerhard Glomm

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States
812-855-7256 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Juergen Jung (Contact Author)

Towson University - Department of Economics ( email )

Baltimore, MD
United States
812-345-9182 (Phone)

HOME PAGE: http://https://juejung.github.io/

Chung Tran

Australian National University (ANU) - School of Economics ( email )

Arndt Building 25B
Canberra, Australian Capital Territory 0200
Australia

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