We will analyze the impact of institutional changes in social security on labour market outcomes, with special reference to the profile of labour force participation at older ages and the timing of retirement. From a theoretical point of view, we will us e a political economy approach to address the reasons behind the initial introduction of these provisions that induce early retirement and their rapid expansion. Several reform proposals put forward by the main international organizations, such as the Wo rld Bank, the European Commission and the IMF, suggest to raise the effective retirement age as a key measure. We will examine the political feasibility of these pension reforms and their welfare implications. From the empirical point of view, the proje ct will use microeconomic data to model the incentive structure of the retirement system and its effect on the labour market status of older adults, with important issues being the availability of early or late retirement options, and the nature of, and entitlement to, disability benefits. Appropriate modelling of these issues needs to recognize that individuals and households take intertemporal decisions in order to provide resources for their old age. Understanding the nature of these decisions, and the way in which these decisions react to changes in household circumstances, both currently and potentially in the future, is therefore an important component of policy analysis in this area. This project will look at the choices individuals and househol ds are currently making, and the outcomes that are associated with these choices, as well as assessing how such choices might potentially respond to policy reform. The project is motiviated by the demographic trends currently faced by European countries.
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