Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/58642
Authors: 
Hairault, Jean-Olivier
Langot, François
Zylberberg, Andre
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6511
Abstract: 
As a preliminary step, we first provide some new empirical evidence that labor market conditions affect retirement decisions at the individual level: unemployed people are more likely to retire. Our main objective in this paper is then to propose an equilibrium unemployment approach to retirement decisions that allows us to unveil the factors which explain why unemployed workers choose to retire earlier and the conditions under which this behavior is optimal. Two main conclusions emerge: the retirement decision of unemployed workers depends on the labor-market frictions whereas that of employed workers does not; the existence of search externalities makes the retirement age of unemployed workers intrinsically suboptimal. Considering Social Security policy issues, we show that the complete elimination of the implicit tax on continued activity is not necessarily welfare-optimizing in a second best world where the labor market equilibrium suffers from distortions.
Subjects: 
search
matching
retirement
Social Security
JEL: 
J22
J26
H55
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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