Microsimulations of the retirement decision: a supply side approach

Abstract

The economic debate on pensions in France has been increasingly focusing on introducing more flexibility in the retirement decision (up to now sharply constrained by the strength of incentives to claim SS benefits at the so-called « full rate » in the private sector): see Charpin (1999) and Taddei (2000). This paper analyzes methodological issues in implementing a supply-side modelling of the retirement decision in the microsimulation model Destinie. We simulate the retirement decision for cohorts 1943 to 1947 under various assumptions regarding the parameterization of the model. To assess the sensitivity of the model to change in the computation of pensions, we also simulate the possible impact on individual behaviours of reforms that would simultaneously decrease the penalties implied by anticipated retirement and increase the level of benefits in case people would decide to keep on working after being entitled to the full rate.microsimulation, retirement decision, pension schemes