Borsch-Supan, Axel; Schnabel, Reinhold:

Social Security and Declining Labor-Force Participation in Germany

In: American Economic Review (Am.Econ.Rev.), Jg. 88 (1998) ; Nr. 2, S. 173-178
ISSN: 00028282
Zeitschriftenaufsatz / Fach: Wirtschaftswissenschaften
Abstract:
Germany has one of the most generous retirement systems in the world. At the same time, Germany also faces one of the most incisive population aging processes. The ratio of workers to pensioners will decrease to less than 1:1 within the next generation. This will put the German pay-as-you-go social-security system under severe pressure. Already, Germany has experienced a sharp increase in the contribution rate to the social-security system. This paper shows that the German public pension system is a textbook example of negative incentive effects on system participation and old-age labor supply. The design of the current system will make coping with the future demographic challenges particularly difficult. ABSTRACT FROM AUTHOR Copyright of American Economic Review is the property of American Economic Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts); Germany has one of the most generous retirement systems in the world. At the same time, Germany also faces one of the most incisive population aging processes. The ratio of workers to pensioners will decrease to less than 1:1 within the next generation. This will put the German pay-as-you-go social-security system under severe pressure. Already, Germany has experienced a sharp increase in the contribution rate to the social-security system. This paper shows that the German public pension system is a textbook example of negative incentive effects on system participation and old-age labor supply. The design of the current system will make coping with the future demographic challenges particularly difficult. ABSTRACT FROM AUTHOR Copyright of American Economic Review is the property of American Economic Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts)