Labor supply elasticity and social security reform

Demographics, Social Security Reform, and Labor Supply

At this point, it is nearly impossible to escape discussion of the aging of the baby boom and its implications for Social Security. No set of reasonable demographic and economic assumptions yields a forecast of long-term solvency for the program as it exists today (Board of Trustees 1997; Congressional Budget Office (CBO) 1997). Some reform is necessary. The open questions are which reforms and...

Labor Supply Responses to Social Security

Economists’ most basic model for studying Social Security policy issues is the so—called life—cycle model of saving behavior. This paper sets up a life—cycle model in which a household simultaneously chooses its lifetime consumption profile and retirement age. The paper calibrates parameters from Consumer Expenditure Survey data, making special use of observations of changes in household consum...

A Labor Supply Elasticity Accord ?

Strong differences of opinion about the labor supply elasticity prevail. One camp infers that the aggregate labor supply elasticity is large because big fluctuations in aggregate hours of work occur in response to small fluctuations in workers’ productivity over the business cycle (Prescott 2005). Another camp points to estimates of low labor supply elasticities from microeconometric studies of...

SOCIAL SECURITY REFORM and LABOR MARKETS : THE CASE OF CHILE

In 1981, Chile reformed its social security system. An inefficient and insolvent pay-asyou-go regime was replaced by system based on individual retirement accounts. Over the years Chile’s reform has been widely praised, and has been carefully studied by policy makers throughout the world. In this paper we focus on a neglected aspect of Chile’s social security reform: its impact on labor market ...

Social Security Eligibility and the Labor Supply of Elderly Immigrants