Choosing the Legal Retirement Age in Presence of Unemployment

25 Pages Posted: 5 Apr 2007

See all articles by Georges Casamatta

Georges Casamatta

Toulouse School of Economics (GREMAQ-CNRS); Centre for Economic Policy Research (CEPR)

Caroline De Paoli

University of Toulouse 1 - Manufacture des Tabacs; École Normale Supérieure (ENS) - Laboratoire d'Economie Theorique et Appliquee (LEA)

Multiple version iconThere are 2 versions of this paper

Date Written: March 31, 2007

Abstract

The aim of this paper is to better understand the impact of unemployment on the design of Pay-As-You-Go pension systems, in the context of population aging.

We consider a model in which people differ according to age and face in every period a given probability of becoming unemployed.

We first determine the optimal pension system, which consists in a payroll tax rate, a pension benefit level and a retirement age and study its comparative statistics with respect to a change of the unemployment rate and the length of life.

We then characterize the issue-by-issue voting equilibrium and compare it to the optimal pension scheme. It is shown that the median voter in general chooses a retirement age lower than the optimal one as well as a higher payroll tax rate.

Suggested Citation

Casamatta, Georges and De Paoli, Caroline, Choosing the Legal Retirement Age in Presence of Unemployment (March 31, 2007). Available at SSRN: https://ssrn.com/abstract=977907 or http://dx.doi.org/10.2139/ssrn.977907

Georges Casamatta (Contact Author)

Toulouse School of Economics (GREMAQ-CNRS) ( email )

Manufacture des Tabacs (bât. F)
21 Allee de Brienne
31000 Toulouse
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Caroline De Paoli

University of Toulouse 1 - Manufacture des Tabacs ( email )

21, allée de Brienne
Toulouse, 31000
France

École Normale Supérieure (ENS) - Laboratoire d'Economie Theorique et Appliquee (LEA) ( email )

48 boulevard Jourdan
75014 Paris
France

Register to save articles to
your library

Register

Paper statistics

Downloads
75
rank
304,425
Abstract Views
706
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information