Labor Market Search and Optimal Retirement Policy

A popular and long-standing view is that social security is a means for young, unemployed people to "purchase" jobs from older workers. Can social security, by encouraging retirement and hence creating job vacancies for the young, improve the allocation of workers to jobs? Maybe, according to a standard model of labor market search, but public retirement programs currently pay the elderly substantially more than their jobs are worth. An important effect is that retirement reduces the value of other vacant jobs. Our results imply that recent reforms aimed at reducing retirement incentives are likely to improve labor market efficiency. (JEL J41, H55, J64, J26) Copyright 2004, Oxford University Press.

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Year of publication:	2004
Authors:	Bhattacharya, Joydeep ; Mulligan, Casey B. ; Reed, Robert R.
Published in:	Economic Inquiry. - Western Economic Association International - WEAI. - Vol. 42.2004, 4, p. 560-571
Publisher:	Western Economic Association International - WEAI

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Extent:	text/html
Type of publication:	Article
Classification:	J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets ; H55 - Social Security and Public Pensions ; J64 - Unemployment: Models, Duration, Incidence, and Job Search ; J26 - Retirement; Retirement Policies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005567967