TY  - RPRT
        AU  - Croix, David de la
AU  - Pierrard, Olivier
AU  - Sneessens, Henri R.
        TI  - Aging and Pensions in General Equilibrium: Labor Market Imperfections Matter
        PY  - 2010/Oct/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5276
        UR  - https://www.iza.org/publications/dp5276
        AB  - This paper re-examines the effects of population aging and pension reforms in an OLG model with labor market frictions. The most important feature brought about by labor market frictions is the connection between the interest rate and the unemployment rate. Exogenous shocks (such as aging) leading to lower interest rates also imply lower equilibrium unemployment rates, because lower capital costs stimulate labor demand and induce firms to advertize more vacancies. These effects may be reinforced by increases in the participation rate of older workers, induced by the higher wage rates and the larger probability of finding a job. These results imply that neglecting labor market frictions and employment rate changes may seriously bias the evaluation of pension reforms when they have an impact on the equilibrium interest rate.
        KW  - labor force participation
KW  - pensions
KW  - aging
KW  - labor market
KW  - search unemployment
KW  - overlapping generations
        ER  -