Social security and retirement across the OECD

Abstract

Employment to population ratios differ markedly across OECD countries, especially for people over 55. Social security features also differ markedly across the OECD, particularly with respect to replacement rates, entitlement ages and earnings tests. I conjecture that differences in social security features explain many differences in employment to population ratios at older ages. I assess my conjecture quantitatively with a life cycle general equilibrium model of retirement. At ages 60-64 the correlation between my model's simulations and observed data is .67. Replacement rates and the earnings tests are key features.

How do Hours Worked Vary with Income? Cross-Country Evidence and Implications

“…Prior studies of aggregate hours worked across countries have almost exclusively focused on rich countries, and in particular on the United States and European countries (e.g., . Explanations of the U.S.-Europe gap in average hours have focused largely on differences in taxation (e.g., Rogerson, 2006;McDaniel, 2011;Bick and Fuchs-Schündeln, 2017), institutions (Alesina et al, 2005) and social security systems (Erosa et al, 2012;Wallenius, 2013;Alonso-Ortiz, 2014). Other studies have focused on understanding changes in hours worked over time, though these have also concentrated on rich countries.…”

Cross‐Country Differences in Unemployment: Fiscal Policy, Unions, and Household Preferences in General Equilibrium

“…Having established its empirical reliability, we then use the model to find out what policy or preference parameters account for the cross‐country differences in the aggregate unemployment rate. Our objective is similar to that of Dhont and Heylen (), Wallenius (), and Alonso‐Ortiz () in earlier work. We make progress by also explicitly testing the potential explanatory power of labour market imperfections, different union preferences in particular, and different tastes for leisure of the households.…”

“…Initial contributions by Prescott (2004), Rogerson (2007), Dhont and Heylen (2008), and Ohanian et al (2008) tried to explain differences in aggregate per capita hours worked. Later work introduced a life-cycle dimension in labour supply and employment in order to explain also the huge cross-country differences in employment among people older than 50 (Rogerson and Wallenius, 2009;Erosa et al, 2012;Alonso-Ortiz, 2014). Another advantage of introducing a life-cycle dimension is that it became possible to model the time allocation of young people between labour and education, and to explain human capital formation as an endogenous variable (Ludwig et al, 2012;Heylen and Van de Kerckhove, 2013;Wallenius, 2013).…”

Employment by age, education, and economic growth: effects of fiscal policy composition in general equilibrium

“…The question is what policies work best? It makes our perspective different from recent contributions in the literature, like those of Dhont and Heylen (2008), Alonso-Ortiz (2011), Wallenius (2012) and Erosa, Fuster, and Kambourov (2012). A central aim of their work is to investigate to what extent differences in various social security programs and taxes between European countries and the US can explain differences in labor market performance between these countries.…”

“…In more recent work, however, Rogerson and Wallenius (2009) and Wallenius (2012) also pay attention to life cycle patterns in labor supply and to employment differences across age groups. Alonso-Ortiz (2011) and Erosa, Fuster, and Kambourov (2012) focus particularly on labor supply late in the life cycle and on the retirement decision of older workers.…”