The Macroeconomics of Early Retirement

Vincenzo Galasso and J. Ignacio Conde-Ruiz

No 3896, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Early retirement represents a policy response to the appearance of a mass of redundant middle-aged workers, who were not entitled to a pension transfer in their old age. This policy is distortionary, since it reduces the incentive to accumulate human capital, hence decreasing economic growth: it shifts part of the tax burden on future generations. Why was it adopted? We suggest that alternative policies - which do not introduce long-term distortions, but impose a larger cost on the current young generation of workers - were blocked by the political opposition of a coalition of the extreme: high income workers, who did not plan to retire early, but sought to reduce the current tax burden, and low income workers, who expected to retire early and to benefit from the early retirement pension.

Keywords: Human capital accumulation; Political sustainability; Redistributive policies (search for similar items in EconPapers)
JEL-codes: D72 H53 H55 (search for similar items in EconPapers)
Date: 2003-05
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (52)

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Related works:
Journal Article: The macroeconomics of early retirement (2004)
Working Paper: The Macroeconomics of Early Retirement
Working Paper: The Macroeconomic of Early Retirement
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