Effects of Sharing Parental Leave on Pensioners' Poverty and Gender Inequality in Old Age. A Simulation in IFSIM

The poverty outcome in old age is affected by labour market reforms. Using our in house agent based simulation model IFSIM we show that sharing equally the parental leave can increase or reduce poverty among the elderly depending on the macro and behavioural responses that the Reform off-sets. In general, it can be good for (elderly) women provided that (i) it spurs them to work more, particularly in older ages (ii) it does not slow down economic growth (hence pension income growth) below a level when working more does not pay. Our simulations show that the effect of this Reform on poverty and gender inequality is time dependent: different outcomes might be expected for different generations depending on whether the balancing mechanism (in the state income pension) is present or not. In general, the Reform might not lead to positive outcomes if it occurs in conjunction with the striking of the automatic balancing, unless a behavioural response to work more among older workers (in response to the balancing) is also unleashed.<p>