The Effect of Old-Age Insurance on Male Retirement: Evidence from Historical Cross-Country Data

Abstract:     
I examine the effect of Old-Age Insurance systems on the labor supply of older men. Male retirement behavior is crucial to the solvency of OAI systems. Historical data on participation rates and OAI rules in thirteen developed countries show rapid falls in participation among men aged 60-4 after pensions were extended to them. I estimate participation elasticities of -0.16 with respect to replacement rates and 0.29 to the net-of-tax wage. It does not appear that endogenous OAI changes bias the regression coefficients. The growth of OAI explains 11 percent of the reduction in participation of men aged 60-4 between 1950 and 2000.

Number of Pages in PDF File: 37

Keywords: Social Security, Public Pensions, Economics of the Elderly, Labor Force and Employment, Retirement Policies

JEL Classification: H55, J14, J21, J26

working papers series