Postponing Retirement: The Political Push of Aging

26 Pages Posted: 27 Sep 2006

See all articles by Vincenzo Galasso

Vincenzo Galasso

University of Lugano; Centre for Economic Policy Research (CEPR)

Date Written: August 2006

Abstract

Conventional economic wisdom suggests because of the aging process, social security systems will have to be retrenched. In particular, retirement age will have to be largely increased. Yet, is this policy measure feasible in OECD countries? Since the answer belongs mainly to the realm of politics, I evaluate the political feasibility of postponing retirement under aging in France, Italy, the UK, and the US. Simulations for the year 2050 steady state demographic, economic and political scenario suggest that retirement age will be postponed in all countries, while the social security contribution rate will rise in all countries, but Italy. The political support for increasing the retirement age stems mainly from the negative income effect induced by aging, which reduces the profitability of the existing social security system, and thus the individuals net social security wealth.

Keywords: Political equilibria, aging, postponing retirement

JEL Classification: D72, H5, H53

Suggested Citation

Galasso, Vincenzo, Postponing Retirement: The Political Push of Aging (August 2006). CEPR Discussion Paper No. 5777. Available at SSRN: https://ssrn.com/abstract=933099

Vincenzo Galasso (Contact Author)

University of Lugano ( email )

Via Giuseppe Buffi 13
Lugano, 6900
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
18
Abstract Views
552
PlumX Metrics