Labor Supply and Retirement Policy in an Overlapping Generations Model with Stochastic Fertility

21 Pages Posted: 20 Apr 2016

See all articles by Ole Hagen Jorgensen

Ole Hagen Jorgensen

World Bank

Svend E. Hougaard Jensen

Copenhagen Business School - Department of Economics

Date Written: July 1, 2010

Abstract

Using a stochastic general equilibrium model with overlapping generations, this paper studies a policy rule for the retirement age aiming at offsetting the effects on the supply of labor following fertility changes. The authors find that the retirement age should increase more than proportionally to the direct fall in labor supply caused by a fall in fertility. The robustness of this result is checked against alternative model specifications and parameter values. The efficacy of the policy rule depends crucially on the link between the preference for leisure and the response of the intensive margin of labor supply to changes in the statutory retirement age. The model has subsequently been calibrated for Brazil by Jorgensen (2010), in the context of the Brazil Aging Study.

Keywords: Labor Markets, Labor Policies, Pensions & Retirement Systems, Economic Theory & Research, Population Policies

Suggested Citation

Jorgensen, Ole Hagen and Hougaard Jensen, Svend Erik, Labor Supply and Retirement Policy in an Overlapping Generations Model with Stochastic Fertility (July 1, 2010). World Bank Policy Research Working Paper No. 5382, Available at SSRN: https://ssrn.com/abstract=1650473

Ole Hagen Jorgensen (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Svend Erik Hougaard Jensen

Copenhagen Business School - Department of Economics ( email )

Porcelænshaven 16 A, 1
Frederiksberg C, DK-2000
Denmark
(+45) 3815 3478 (Phone)

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