Labor supply elasticity and Social Security reform

Imrohoroglu, Selahattin, and Sagiri Kitao. “Labor supply elasticity and Social Security reform”. CRR WP 2009-5, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, January 2009. http://hdl.handle.net/2345/bc-ir:104914.
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Abstract

Previous literature on social security reform has used a variety of period utility functions and calibrated values for the intertemporal elasticity of substitution (IES) in labor. In this paper, we extensively study various preferences and values for IES in a general equilibrium model with overlapping generations. We calibrate the model to key U.S. macroeconomic indicators and document how social security reform impacts the economy under different preferences. We find that aggregate effects are surprisingly similar, regardless of the wide range of the values of IES used. However, reform leads to a life-cycle reallocation of work hours from early years to later working years and the size of this reallocation significantly increases with the IES.

Title
Labor supply elasticity and Social Security reform
Author
Imrohoroglu, Selahattin
Kitao, Sagiri
Center
Center for Retirement Research
Genre
working paper
Date Issued
January 2009
Publisher
Center for Retirement Research at Boston College
Series Title
CRR WP
Series Number
2009-5
Persistent Link
http://hdl.handle.net/2345/bc-ir:104914
Use Restrictions
These materials are made available for use in research, teaching and private study, pursuant to U.S. Copyright Law. The user must assume full responsibility for any use of the materials, including but not limited to, infringement of copyright and publication rights of reproduced materials. Any materials used for academic research or otherwise should be fully credited with the source. The publisher or original authors may retain copyright to the materials.
Subject
Social Security

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