Conventional pension systems suffer from a design defect which makes them financially unsustainable, and a source of inefficiency for the economy as a whole. The paper outlines a second-best policy which includes a public pension system made up of two parallel schemes, a Bismarckian one allowing...

The present paper studies the growth and efficiency consequences of pension funding with individual retirement accounts in a general equilibrium overlapping generations model with idiosyncratic lifespan and labor income uncertainty. We distinguish between economies with rational and hyperbolic...

Recent reforms that aim at reducing the upcoming burdens of population ageing might seriously harm low income individuals. An increase in old-age poverty and disability will be the result. Under this prospect, the present paper quantitatively characterizes the optimal progressivity of unfunded...

We investigate the responsiveness of individual retirement decisions to changes in financial incentives. A reform increased women's normal retirement age (NRA) in two steps from age 62 to age 63 first and then to age 64. At the same time retirement at the previous NRA became possible at a...

While the effect of social security systems on retirement decisions has received much attention, the impact of these systems on individuals incentives to invest in their human capital has not been analyzed. We integrate human capital investment and retirement decisions in a simple analytical...

In 1988, an early retirement program (AFP) was introduced in Norway for the 66-years-old. Since then, AFP has gradually been extended and by now it covers workers aged 62-66. In this paper we employ a multinominal logit model to study the transition between states in the labour market. The model...

Models that allow for non-cooperative as well as cooperative behavior of families are estimated on data from Norway in 1993 and 1994. The husband is eligible for early retirement while the wife is not. The models aim at explaining labor supply behavior of married couples the first twelve months...

The gains in life expectancy are expected to double the dependency ratio and increase population by 10% in Switzerland until 2050. To quantify the effects on pensions, taxes and social contributions, we use an overlapping generations model with five margins of labor supply: labor market...

Public pay-as-you-go pensions still form the dominant pillar of old-age provision in Germany. This is in marked contrast to the situation in Anglo-Saxon countries. It has advantages if labour markets are strong, e.g., following a quick recovery from the Great Recession. It has disadvantages, as...

The Croatian system of old-age provision comprises a traditional public pay-as-you-go scheme and a mandatory funded scheme ("second pillar") that will provide increasing amounts of supplementary pensions to those entering retirement in the future. Due to the continuing economic crisis, the...