اقتصاد کلان بازنشستگی زود هنگام

Early retirement was introduced after the appearance of redundant middle-aged workers, not entitled to pensions. This distortionary policy reduces human capital accumulation and economic growth, but shifts part of the tax burden on future generations. Why was it adopted? Alternative policies, which do not introduce long-term distortions, but impose a larger cost on the current generation of workers, were blocked by a coalition of high income workers, who did not plan to retire early, but sought to reduce the current tax burden, and low income workers, who expected to retire early and to benefit from the early retirement pension.

Since their adoption between the late 1960s and the 1970s, early retirement provisions1 have been so widely used to become a distinctive feature of the social security system in all industrialized countries. Early retirement is not innocuous, tough. Gruber and Wise, 1999 and Gruber and Wise, 2004; Blöndal and Scarpetta (1998) have shown that this provision is, in fact, responsible for the dramatic decrease of the labor force participation of the last few decades among middle-aged workers2. In virtually all OECD countries, but Iceland and Japan, the average labor force participation of males aged between 60 and 64 has dropped by at least 25%. Two striking cases are the Netherlands, from 84.7% in 1960 to only 19.1% in 2000, and France, from 68.7% in 1960 to only 17.8% in 2000. Ahituv and Zeira (2000) have complemented this view by suggesting that, in the presence of technologic progress, workers with lower human capital, or with more technology-specific human capital, are induced to take advantage of this provision, and to retire early. In a demographic context of aging population, this retirement behavior contributes to increase the dependency ratio, and therefore, exacerbates the financial unbalance of the pay as you go (PAYG) social security systems. Furthermore, Herbertsson and Orszag (2001) have calculated that early retirement can be held responsible for a reduction in the order of 5–7% of potential annual GDP in OECD countries, with even higher figures for EU countries. Early retirement provisions were initially introduced3 in the late 1960s and the 1970s, after large shocks to the labor market, which led to the appearance of a mass of redundant middle-aged workers, who were not entitled to a pension transfer in their old-age. Early retirement awarded them a pension. In this paper, we provide a political economy explanation for the adoption of these distortionary early retirement provisions, rather than alternative non-distortionary policy measures. Early retirement introduces long-term distortions in the economy. In fact, the generous incentives to retire early induce workers to accumulate less human capital, hence reducing the growth rate of the economy. Alternative, non-distortionary policies could instead have been introduced to accommodate the labor market shocks. We concentrate on one-time “bundled” policies, which award an old-age transfer to the elderly with incomplete working history, do not touch the entitlement of the elderly with complete working history, and may generate some income redistribution among the young. In our political environment, any feasible policy response to the negative labor market shock has to defeat the status quo—consisting of a simple unfounded social security system that provides an old-age pension only to those agents who contributed to the system in their youth—in a pairwise majoritarian voting game. All feasible policies are then evaluated in a pairwise voting game. When we compare a feasible bundled policy to the early retirement provision, a clear trade-off emerges. Bundled policies do not create long-term distortions, but impose a large cost on the current young generation of workers—since they need to generate enough income redistribution among the young to be preferred to the status quo. Early retirement—on the other hand—has negative, long-lasting effects on the growth of the economy, but induces a lower tax burden on the current young, although the tax bill of all future workers increases. In a pairwise comparison, early retirement enjoys the support of a coalition of the extreme: high income workers, who do not plan to retire early, but sought to reduce the current tax burden, and low income workers, who expect to retire early and to retain their early retirement pensions in their old-age. To capture the relevance of the young agents' expectations, as it is common in the voting models of social security (see Galasso and Profeta, 2002, for a survey), we concentrate on subgame perfect equilibrium outcomes of our voting game. To capture the distortionary effect of early retirement, we introduce an overlapping generations economy with human capital accumulation and growth. Young individuals are heterogeneous in their innate ability, which depends on their parents' ability and on the average human capital in the economy. They choose how much human capital to accumulate through an education technology, and when to retire. These decisions determine their labor income. The social security system consists of a PAYG scheme: young workers pay a proportional labor income tax and the proceedings are divided among the retirees. Under early retirement, workers who retire early are awarded an early retirement pension, while those who retire at mandatory age receive the full pension. In this setting, early retirement persistently distorts the human capital accumulation decision of the low-ability types, and thus reduces economic growth. In its initial political equilibrium, the economy features a social security system with no early retirement—our status quo. Then an unexpected shock takes place, which forces a large mass of workers, who have not reached normal retirement age, out of the labor market. These workers have an incomplete working history and thus—under the status quo system—they are not entitled to a pension in their old-age. Early retirement and bundled policies provide them, respectively, an early retirement pension and a (one-time) old-age transfer. There has recently been a growing interest in the political economy of early retirement provisions. Lacomba and Lagos (2000) study a model where individuals vote on the mandatory retirement age for a given level of redistribution of the social security system. Casamatta et al. (2002) complement this effort by studying the political determination of the size of the pension system in a model with endogenous retirement for a given early retirement provision. Conde-Ruiz and Galasso (2003a) focus on policy persistence4 to account for the existence of early retirement provisions in social security systems. In their paper, the political support of a relevant fraction of the current young and middle-aged workers hinges on their expectation that the early retirement provision will be in place when they will be able to take advantage of it. These papers represent positive contributions aimed at explaining the different features of the early retirement scheme. Cremer et al. (2002), on the other hand, have a normative approach along the lines of the traditional optimal taxation literature. They show that when first-best redistributive instruments are not available, because some variables, such as individual productivity or health status, are not observable, early retirement provisions are part of the optimal-tax transfer policy. The paper5 proceeds as follows: Section 2 introduces the economic model and the social security system, while Section 3 describes the status quo, the early retirement provision and characterizes alternative policy responses. Section 4 defines the political game and compares the policies. Section 5 concludes.

In this paper, we argue that early retirement provisions introduce long run distortions in the economy. In fact, the prospect of retiring early—by shortening the working life—reduces the incentives to accumulate human capital, thereby decreasing economic growth. Additionally, this provision shifts part of the increase in the tax burden on future generations. The adoption of generous early retirement provisions in the late 1960s and the 1970s followed a period of large shocks to the labor market, which had created a large mass of redundant middle-aged workers, not entitled to a pension transfer in their old-age; and was aimed at providing these elderly individuals with a pension transfer. Indeed, early retirement was not the only possible response to the appearance of redundant workers with no entitlement to a pension. A wide variety of temporary policies was available to transfer resources to the workers initially hit by the negative shock in their old-age. However, these one-time policies did not typically enjoy the support of a large share of voters, and hence did not constitute a political equilibrium. To see this, we have analyzed an alternative policy, with a low informational requirement, that (i) provides the elderly with incomplete working history with the same transfer as the early retirement pension, (ii) has no impact on the elderly entitled to an old-age pension, and (iii) provides a lump-sum (redistributive) transfer to the young. This bundled policy is then compared to the status quo and to early retirement. A clear trade-off emerges from comparing this bundled policy to the early retirement provision. To win the support of the low-ability young—and thereby to defeat the status quo—a bundled policy has to generate enough income redistribution among the young. Thus, unlike early retirement, this one-time policy does not reduce the long-term economic growth, but imposes a larger tax burden on the current young generation of workers. In a pairwise comparison, early retirement wins the support of a coalition of the extreme: high income workers, who do not plan to retire early, but prefer this provision because of its lower current tax burden, and the low income workers, who expect to retire early.