Social Science Research Center Berlin

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Whitepaper: Pensions With Early Retirement And Without Commitment

by Social Science Research Center BerlinJan 01, 2008

This research paper shows that more generous early retirement provisions as well as lower employment lead to lower steady state pension rates if governments weigh the welfare of the older persons relatively strongly. A relatively stronger weight on the welfare of the young reverses the results. The driving forces behind those findings are governments that cannot commit to pension policies and consequently take into account future governments policies when maximizing electoral support from the currently young and old constituencies.