Aging, Labor Markets and Pension Reform in Austria

University of St. Gallen Economics Discussion Paper No. 2004-03

46 Pages Posted: 9 Apr 2004

See all articles by Christian Keuschnigg

Christian Keuschnigg

University of St. Gallen – Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Mirela Keuschnigg

Johannes Kepler University

Date Written: January 2004

Abstract

This paper investigates the dynamic consequences of demographic change and various pension reform scenarios for Austria. The analysis is based on a computable overlapping generations model with life-cycle labor supply, savings, and search unemployment. The public sector is decomposed into general government and an unfunded pension system with a tax benefit linkage. Our quantitative analysis considers several pension reform scenarios on top of the demographic transition in an aging society. We find that lowering the pension replacement rate and increasing the retirement age can have strong labor market effects. They strengthen labor supply both in terms of job search intensity, leading to lower unemployment rates, and hours worked.

Keywords: Pension reform, demographic change, unemployment

JEL Classification: C68, D58, E62, J64, H55

Suggested Citation

Keuschnigg, Christian and Keuschnigg, Mirela, Aging, Labor Markets and Pension Reform in Austria (January 2004). University of St. Gallen Economics Discussion Paper No. 2004-03. Available at SSRN: https://ssrn.com/abstract=525964 or http://dx.doi.org/10.2139/ssrn.525964

Christian Keuschnigg (Contact Author)

University of St. Gallen – Department of Economics (FGN-HSG) ( email )

Varnbuelstrasse 19
St. Gallen, 9000
Switzerland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Mirela Keuschnigg

Johannes Kepler University ( email )

Altenbergerstr. 69
Linz, Uper Austria 4040
Austria

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