Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19035
Authors: 
Conde-Ruiz, Jose Ignacio
Galasso, Vincenzo
Profeta, Paola
Year of Publication: 
2005
Series/Report no.: 
CESifo Working Paper 1571
Abstract: 
We provide a long-term perspective on the individual retirement behaviour and on the future of retirement. In a Markovian political economic theoretical framework, in which incentives to retire early are embedded, we derive a political equilibrium with positive social security contribution rates and early retirement. Aging has two opposite effects: it leads to lower taxes and fewer (early) retirees, while a poorer median voter will push for higher contributions. The model highlights the existence of crucial income effects: a decrease of the income of young people will induce them to postpone retirement and to vote for less social security.
Subjects: 
pensions
income effect
tax burden
politico-economic Markovian equilibrium
JEL: 
H55
D72
H53
Document Type: 
Working Paper

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