Macroeconomic implications of early retirement in the public sector: The case of Brazil

Glomm, Gerhard; Jung, Juergen; Tran, Chung

doi:10.1016/j.jedc.2008.08.012

Cited by 22 publications

(9 citation statements)

References 35 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The macroeconomic effects of a social security reform are not a common area of focus in the literature over social insurance, especially in the developing countries (Glomm, 2006). Ferreira studies social security reforms in the Brazilian economy (Ferreira, 2004 andFerreira, 2005), and reveals useful information regarding the contributions of the reforms for the economic recovery of Brazil as a developing country.…”

Section: Literature Reviewmentioning

confidence: 99%

Macroeconomic Implications of Changes in Social Security Rules

Bagis¹

2021

IJRBS

View full text Add to dashboard Cite

The Turkish social insurance system has been feverishly debated for years, particularly through its burden on the economy. The most recent reform is an attempt to neutralize the deterioration within the social security system and its effects on the economy. After the recent reform, ‘the way that retirement benefits are calculated’ is changed unfavorably for workers and the minimum age for retirement is increased. In particular, for an agent with 25 years of social security tax payments, the replacement rate is down from 65 percent to 50 percent. On the other hand, retirement age is up from 60 to 65. The aim of this paper is to investigate the macroeconomic effects of these changes using an OLG model. The author’s findings indicate that labor supply, output and capital stock increase when changes above are applied to the benchmark economy calibrated to the Turkish economy data in 2005. A critical change with the current reform is that the marginal benefit of working has become uniform over ages. In a simulation exercise, the marginal retirement benefit in the benchmark economy is changed to be uniform over ages while keeping the size of social security system unchanged. As a result, the benefit of retiring at a later period increases. However, uniform distribution of the marginal benefits itself decreases both the capital stock and output of the economy. Increasing the retirement age has positive effects on the economy since agents obtain retirement benefits for fewer years and at an older age.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Macroeconomic Implications of Changes in Social Security Rules

Bagis¹

2021

IJRBS

View full text Add to dashboard Cite

show abstract

“…Typical public sector reforms include cuts to pensions of public sector workers (i.e. Imrohoroglu and Kitao (2009), Glomm, Jung and Tran (2009) and Glomm et al (2010)), cuts to wages of public sector workers, or hiring freezes or even layoff as branches of governments are consolidated (Buiter and Rahbari (2010)).…”

Section: Underreporting Public Debt and Risk Premium Effectsmentioning

confidence: 99%

“…Kitao (2010) uses a large scale life-cycle model to quantify the effects of temporary tax cuts and rebate transfers in the U.S. Auerbach and Kotlikoff (1987), Imrohoroglu, Imrohoroglu and Jones (1995), Kitao (2009), and formulate overlapping generations models with heterogenous agents and incomplete markets to analyze the distributional role of fiscal programs such as social security and health insurance. Glomm, Jung and Tran (2009) and Glomm et al (2010) quantify the macroeconomic and welfare effects of public pension reforms in an overlapping generations model with productive governments. In this paper we focuses on fiscal consolidation and austerity measures and the role of the risk premium in economies with large public debt.…”

Section: Introductionmentioning

confidence: 99%

Fiscal Austerity Measures: Spending Cuts vs. Tax Increases

2018

Self Cite

View full text Add to dashboard Cite

We formulate an overlapping generations model with skill heterogeneity and productive and non-productive government programs to study the macroeconomic and intergenerational welfare effects caused by risk premium shocks and government debt reductions. We demonstrate that in a small open economy with a high level of debt-to-GDP ratio a small increase in the risk premium leads to substantial output contraction and negative welfare effects. Next, we quantify the effects of reducing the debt-to-GDP ratio using a wide range of fiscal austerity measures. These reforms result in trade-offs between short-run contractions and long-run expansions in aggregate output. In addition, the spending-based austerity reform is dominated by the tax-based reform in terms of income in the short run, but becomes dominant in the long run. The welfare effects vary significantly across generations, depending on fiscal austerity measures, skills and working sector. The current old and middle age generations experience welfare losses while current young workers and future generations are beneficiaries of the reforms. A mixed reform results in the largest welfare effects.JEL Classification: E21, E63, H55, J26, J45

show abstract

“…16 We do not know any estimate for the parameter governing the intertemporal elasticity 1 3 Generous pensions and early retirement are highly correlated in Brazil, especially in the public sector. See Glomm, Jung and Tran (2009) for more details on this issue.…”

Section: Preferencesmentioning

confidence: 99%

The Extension of Social Security Coverage in Developing Countries

Tran

Jung

2007

SSRN Journal

Self Cite

View full text Add to dashboard Cite

We study the dynamic general equilibrium effects of introducing a social pension program to elderly informal sector workers in developing countries who lack formal risk sharing mechanisms against income and longevity risk. To this end, we formulate a stochastic dynamic general equilibrium model that incorporates defining features of developing countries: a large informal sector, private transfers as an informal safety net, and a non-universal social security system. We find that the extension of retirement benefits to informal sector workers results in efficiency losses due to adverse effects on capital accumulation and the allocation of resources across formal and informal sectors. Despite these losses recipients of social pensions experience welfare gains as the positive insurance effects attributed to the extension of a social insurance system dominate. The welfare gains crucially depend on the skill distribution, private intra-family transfers and the specific tax used to finance the expansion.

show abstract

Macroeconomic implications of early retirement in the public sector: The case of Brazil

Cited by 22 publications

References 35 publications

Macroeconomic Implications of Changes in Social Security Rules

Macroeconomic Implications of Changes in Social Security Rules

Fiscal Austerity Measures: Spending Cuts vs. Tax Increases

The Extension of Social Security Coverage in Developing Countries

Contact Info

Product

Resources

About