Discussion Papers of Business and Economics
Department of Business and Economics, University of Southern Denmark
Casper Worm Hansen
The optimal legal retirement age in an OLG model with endogenous labour supply
() and Lars Lønstrup
Abstract: The long run welfare implications of the legal retirement
age are studied in a perfect foresight overlapping-generations model where
agents live for two periods. Agents’ lifetime is divided between working
life and retirement by a legal retirement age controlled by the government
whereas agents, besides savings, control the intensive margin or "yearly"
labour supply. The legal retirement age is utilized to dampen distortionary
effects of payroll taxes and public pension annuities and promote capital
accumulation. We show that a social optimal legal retirement age exists and
how it depends on whether payroll taxes or benefit annuities ensures budget
balance of the PAYG pension system.
Keywords: Optimal legal retirement age; pay-as-you-go-pension systems; overlapping-generations model; (follow links to similar papers)
JEL-Codes: E61; H55; J26; (follow links to similar papers)
26 pages, July 1, 2009
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Lene Holbæk ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom