SSE/EFI Working Paper Series in Economics and Finance
Social Insurance and Retirement: A Cross-Country Perspective
() and Johanna Wallenius
Abstract: In this paper we study the role of social insurance,
namely old-age pensions, disability insurance and healthcare, in accounting
for the differing labor supply patterns of older individuals across OECD
countries. To this end, we develop a life cycle model of labor supply and
health with heterogeneous agents. The key features of the framework are:
(1) people choose when to stop working, and when/if to apply for disability
and pension benefits, (2) the awarding of disability insurance benefits is
imperfectly correlated with health, and (3) people can partially insure
against health shocks by investing in health, the cost of which is
dependent on health insurance coverage. We find that the incentives faced
by older workers differ hugely across countries. In fact, based solely on
differences in social insurance programs, the model predicts even more
cross-country variation in the employment rates of people aged 55-64 than
we observe in the data.
Keywords: Life cycle; Retirement; Disability insurance; Health; (follow links to similar papers)
JEL-Codes: E24; J22; J26; (follow links to similar papers)
36 pages, April 25, 2013
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Full text versions of the paper:
- This paper is forthcoming as:
Laun, Tobias and Johanna Wallenius, 'Social Insurance and Retirement: A Cross-Country Perspective', Review of Economic Dynamics.
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