Equilibrium unemployment and retirement

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6511

Classification and Topics

• Classification: Wirtschaft ; Time Allocation and Labor Supply ; Retirement; Retirement Policies ; Social Security and Public Pensions
• Subject: search ; matching ; retirement ; Social Security ; Altersgrenze ; Arbeitslosigkeit ; Arbeitsuche ; Arbeitsmarkt ; Gleichgewicht ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hairault, Jean-Olivier ; Langot, François ; Zylberberg, Andre
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/58642
• URN: urn:nbn:de:101:1-201208096293
• Last update: 10.03.2025, 11:42 AM CET