Title

Labor Market Search and Optimal Retirement Policy

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

10-2004

Journal or Book Title

Economic Inquiry

Volume

42

Issue

4

First Page or Article ID Number

560

Last Page

571

DOI

10.1093/ei/cbh081

Abstract

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 Classification

J41, J64, J28, H55

Comments

This article is published as Labor Market Search And Optimal Retirement Policy (with Robert R Reed and Casey Mulligan),Economic Inquiry, 42, 560-571, 2004. DOI:10.1093/ei/cbh081. Posted with permission.

Copyright Owner

Wiley Online

Language

en

File Format

application/pdf

Published Version Working Paper

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