بازنشستگی پیش از موعد

Generous early retirement provisions account for a large proportion of the drop in the labor force participation of elderly workers. The aim of this paper is to provide a positive theory of early retirement. We suggest that the political support for generous early retirement provisions relies on: (i) the existence of a significant group of elderly workers with incomplete working history, who are not entitled to an old age pension; and (ii) the intragenerational redistribution built in this provision via the utility from leisure that induces low-ability workers to retire early. The majority which supports early retirement in a bidimensional voting game is composed of elderly with incomplete working history and low-ability workers; social security is supported by retirees and low-ability workers.

Generous early retirement provisions are largely responsible for the dramatic drop in the labor force participation among middle-aged and elderly workers of the last thirty years (see Gruber and Wise, 1999; Blöndal and Scarpetta, 1998). The generosity ofthese provisions—measured by the implicit tax on continuing to work (Gruber and Wise, 1999) or by the replacement rate (Blöndal and Scarpetta, 1998)—has induced workers, in particular, low-educated ones, to retire early. Early retirement has thus complemented the aging process in increasing the ratio of retirees per worker—the dependency ratio. As argued in many studies (see Gruber and Wise, 1999; Blöndal and Scarpetta, 1998; Boldrin et al., 1999, among others), this phenomenon has rapidly become the crucial— endogenous—problem for the financial sustainability of the unfunded pension systems. Due to early retirement, in fact, fewer workers are required to finance the (generous) pensions of more retirees. The aim of this paper is to provide a positive theory of early retirement. We propose a politico-economic explanation of the adoption of generous early retirement provisions. Why did a majority of voters, in most industrialized countries, decide to award large pensions to middle aged workers with incomplete working history? We suggest that the political support in favor of early retirement hinges on two crucial conditions. First, the appearance of a large group of redundant or unemployed elderly workers with incomplete working history, who are not entitled to an old-age pension. The introduction of early retirement awards them a pension transfer. Second, the existence in the early retirement provision of an element of intragenerational redistribution via the utility from leisure. In fact, while leisure is equally valued across ability types, the foregone labor income is lower for less productive types, who therefore find more convenient to retire early. This retirement behavior gives rise to an endogenous group of workers with incomplete working history, which guarantees the future constituency for this provision.1 The main contribution of the paper is to demonstrate that under these two conditions, a social security system with early retirement arises and is sustained as a politico-economic equilibrium outcome of a dynamic majoritarian voting game. The voting majority which supports early retirement is composed of elderly with incomplete working history and low-ability young, who expect to retire early. The size of the social security system is determined by a voting majority of all retirees and low-ability young. Although several studies have analyzed the economic determinants of the early retirement decisions (see among others, Feldstein, 1974; Boskin and Hurd, 1978; Diamond and Mirrless, 1978; Lazear, 1979; Crawford and Lilien, 1981), to our knowledge this is the first attempt to provide a theoretical explanation of the introduction of (generous) early retirement provisions. Our analysis is motivated by two observations. First, in most European countries, between 1961 and 1977, generous early pathways from the labor market were made available to redundant or unemployed elderly workers under a wide array of early retirement schemes. These included special pensions to unemployed elderly workers (in Austria, Finland, and Germany), special contracted pensions for redundant workers (in Austria, Belgium, France, and Germany) and disability benefits awarded on the basis oflabor market considerations (in Denmark, Germany, Netherlands, Norway, Spain, and Sweden). During the 1970s and 1980s, these eligibility criteria were typically relaxed and early retirement provisions became more widely available to elderly workers. More emphasis was then put on programs that allowed early retirement in exchange for the employment of young unemployed workers. Second, a large majority of the workers who, over the years, have taken advantage of these early retirement provisions is composed of less educated workers. We introduce a dynamically efficient overlapping generations economy with storage technology. Young workers may be of two ability types, low and high. They decide when to retire and their labor income depends on their retirement decision and on their initial ability. Old age retirement is mandatory. The social security system consists of a PAYG scheme. Young workers contribute a fixed proportion of their labor income to the system, and the proceedings are divided lump sum among the retirees. There may exist an early retirement provision, in which case workers who exit the labor market at an early stage, i.e., with an incomplete working history, are awarded an early retirement pension. Individuals who retire at mandatory age receive the full pension. The social security system is determined in a bidimensional majoritarian voting game played by young and old agents. Voters cast a ballot over the payroll tax rate, which finances the social security system, and over the existence of an early retirement provision, which entitles agents with incomplete working history to a full pension. This political game displays two important features. First, because of the bidimensionality of the issue space, a Nash equilibriumof this majoritarian voting gamemay not exist. To overcome this problem, we use Shepsle’s (1979) notion of structure induced equilibrium. In other words, we introduce a set of institutional restrictions which reduces our game to an issue-by-issue voting game. Second, in absence of a commitment device which restricts future policies, a social security system may not be politically sustainable. In fact, young workers may refuse to transfer resources to current retirees, as they have no guarantee of being rewarded with a corresponding pension in their old age. To deal with this feature, we consider an implicit contract among successive generations, and thus concentrate on subgame perfect equilibriumoutcomes.2 To summarize,we introduce a notion of stationary subgame perfect structure induced equilibrium which applies the idea of subgame perfection to the concept of structure induced equilibrium, introduced by Shepsle (1979). The paper proceeds as follows: Section 2 presents some relevant facts on early retirement. Section 3 introduces the economic model and the social security system, while Section 4 analyzes the voting game and our notion of equilibrium. Section 5 characterizes the politico-economic equilibria, and Section 6 concludes. All formal definitions and proofs are in Appendix A.

Generous early retirement provisions exacerbate the financial distress of current unfunded social security systems by increasing the dependency ratio. In fact, by inducing early exits from the labor market, these provisions reduce the number of workers—and thus of contributors to the social security system—while increasing the number of retirees—and thus of recipients from the system. We introduce the simplest overlapping generations model that is able to reproduce these characteristics, and we analyze the political determinants whichmay lead to the adoption of early retirement. In our setting, low- and high-ability agents decide when to retire in order to maximize a linear utility function, which attributes value to leisure in youth and to oldage consumption. Our qualitative results would however also hold true in a more general model, with several types of agents and a concave—rather than linear—utility function. The main message of this paper is that the initial political support and the long run political sustainability of early retirement provisions require two conditions: a large initial shock to the labor market that gives rise to a mass of redundant elderly workers and some degree of intragenerational redistribution in the provision. We argue that the initial adoption of this institution relies heavily on the existence of an initial stock of redundant or unemployed elderly people who exited the labor market with an incomplete working history, and who, therefore, were not entitled to an old age pension. The adoption of early retirement awarded them a pension. An analysis of the eligibility criteria of the initial early retirement provisions to be adopted in Europe between 1961 and 1977 confirms this view. Despite the heterogeneity of these programs across countries already pointed out by Gruber and Wise (1999), these early pathways from the labor market were mainly targeted to redundant and unemployed elderly workers. In fact, they included different types of pensions to unemployed elderlyworkers, special contracted pensions for redundant workers, and disability benefits awarded on the basis of labor market considerations. More general early retirement provisions were later introduced. The long run political sustainability of this institution—we further suggest—is based on the generosity of these provisions and on the existence of an element of within cohort redistribution through the utility from leisure. Early retirement provides generous pension transfers to the middle-aged, and allows them to enjoy additional leisure, which may also be interpreted as the income obtained from working on the black market. Moreover, while leisure has a similar valuation across ability types, the foregone labor income is lower for less productive types, thereby introducing an element of within cohort redistribution. These features induce workers—especially low ability ones—to retire early and thus create an endogenous group of workers with incomplete working history, which guarantees the future support to early retirement. Evidence from Blöndal and Scarpetta (1998) confirms that, over the years, less educated workers have indeed used these provisions more extensively.