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Pension Reforms, Population Aging, and Retirement Decision of the Elderly in a Neoclassical Growth Model

Published online by Cambridge University Press:  14 July 2021

Makoto Hirono  and
Kazuo Mino
Makoto Hirono
Affiliation:
Faculty of Policy Studies, Tokushima Bunri University, Yamashiro-cho, Tokushima, 770-8055 Japan
Kazuo Mino*
Affiliation:
Institute of Economic Research, Kyoto University, Yoshida Honmachi, Sakyo-ku, Kyoto, 606-8501 Japan
*
*Corresponding author. Email: [email protected]
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Abstract

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This study explores the linkage between the labor force participation of the elderly and the long-run performance of the economy in the context of a two-period-lived overlapping generations model. We assume that the old agents are heterogeneous in their labor efficiency and they continue working if their income exceeds the pension that can be received in the case of full retirement. We first inspect the key factors that determine the retirement decision of the elderly. We then examine analytically as well as numerically the long-run impact of labor participation of the elderly on capital accumulation and income distribution.

Keywords

Retirement decisionlabor force participationpopulation agingpension systemcapital accumulationE10E62
Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 2 , March 2023 , pp. 275 - 296
Copyright
© Cambridge University Press 2021

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