Social security reforms

Benefit claiming, labor force participation, and long-run sustainability

Selahattin Imrohoroǧlu, Sagiri Kitao

Research output: Contribution to journalArticle

38 Citations (Scopus)

Abstract

This paper develops a general equilibrium life-cycle model with endogenous labor supply in both intensive and extensive margins, consumption, saving, and benefit claiming to measure the long-run effects of a proposed Social Security reform. Agents in the model face medical expenditure, wage, health, and survival shocks. Raising the normal retirement age by two years increases labor supply by 2.8 percent and the capital stock by 12.6 percent, showing that both margins of adjustment are critical. General equilibrium effects are important to account for the effects of reform on savings, although the effects on labor supply are less important.

Original languageEnglish
Pages (from-to)96-127
Number of pages32
JournalAmerican Economic Journal: Macroeconomics
Volume4
Issue number3
DOIs
Publication statusPublished - 2012 Jul
Externally publishedYes

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Social security reform
Labor force participation
Sustainability
General equilibrium
Labor supply
Health
Savings
Medical expenditures
Extensive margin
Retirement age
Wages
Endogenous labor supply
Intensive margin
Consumption and saving
Capital stock
Margin
Life-cycle model

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Social security reforms : Benefit claiming, labor force participation, and long-run sustainability. / Imrohoroǧlu, Selahattin; Kitao, Sagiri.

In: American Economic Journal: Macroeconomics, Vol. 4, No. 3, 07.2012, p. 96-127.

Research output: Contribution to journalArticle

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