Pension Reform and Labor Markets


Place: Federal Press and Information Office, Berlin
Date: May 19-21, 2001
Contact: Mike Orszag and Dennis J. Snower (Birkbeck College, University of London)



The conference was concerned with the interplay between pension reform and labor market activity.

It is frequently argued that in many European countries the combination of unfunded pension benefits, unemployment benefits, and disability benefits reduce the incentives to work and to participate in the labor force, and thereby reduce the tax base from which these benefits are funded. This development may pose a severe fiscal threat to the sustainability of the current pension and labor market support systems. This problem is exacerbated by aging populations, the weakening of family ties, increasing interruptions of working spans, and the spread of part-time and temporary work.

Policy makers have recognized that pension reforms, designed to address the problems above, may be expected to influence labor market incentives. These incentives, in turn, not only affect employment, unemployment, and labor market participation, they also influence the effectiveness of pension reform. Although this interplay between pension reform and labor market activity is extremely important for policy purposes, it has received relatively meager attention in economic analysis thus far. The aim of this workshop was to help fill this important gap.

The conference was concerned with the following themes:

  • Pensions, Savings and Labor Market Activity: This theme included such topics as the effects of pension design on savings and labor market behavior, pension portability and labor market flexibility, pension governance issues and labor market performance.
  • Early Retirement and Labor Market Participation: Here the focus was on topics such as the interaction between early retirement and work incentives, the effect of earnings tests on early retirement behavior, and the effects of job tenure and earnings volatility on early retirement behavior.
  • Pension and Labor Market Reforms: This theme included topics such as the effects of pensions coverage on labor market performance, defined benefit versus defined contribution arrangements, and policy complementarities between pension reforms, savings policies, and employment creation measures.


Some of the papers are downloadable in PDF format by clicking on the title.

Saturday, May 19

9:00 - 9:15

Welcome (Organizers)


9:15 - 12:00

First Session: Labour Supply and Social Security

Richard Johnson (Federal Reserve Bank of Kansas City)
"The Effect of Old-Age Insurance on Retirement: Evidence from Historical Cross-Country Data"
[slides for this paper]

Axel Boersch-Supan (University of Mannheim)
"Incentive Effects of Social Security under an Uncertain Disability Option"

Salvador Valdes-Prieto
(Catholic University of Chile)
"Links between participation decisions and pension funding"
[slides for this paper]



12:00 - 13:00




13:00 - 15:00

Second Session: Private Pensions

Richard Hinz (US Department of Labor)
Martin Holmer (Policy Simulation Group, Inc.)
Joseph Piacentini (US Department of Labor)
"The Accidental Pension: Miracle Cure or Retirement Roulette"

Richard Disney (University of Nottingham)
Carl Emmerson (Institute for Fiscal Studies)
"Job Mobility and Personal Pensions"

Vincenzo Andrietti (University Carlos III de Madrid)
"Occupational Pensions and Interfirm Job Mobility in the European Union. Evidence from the ECHP Survey"



15:00 - 15:30




15:30 - 17:30

Third Session: New Ideas in Early Retirement

Tryggvi Herbertsson (University of Iceland)
"The Costs of Early Retirement"

Steinar Strom (University of Oslo and IZA)
"Retirement in Non-Cooperative and Cooperative Families"

Vincenzo Galasso (University of Bocconi)
"Early Retirement"



Sunday, May 20

10:30 - 11:00




11:00 - 12:20

First Session: Pensions, Savings and Income Distribution

Margherita Borella (CeRP, University of Turin)
"Social Security Systems and the Distribution of Income: an Application to the Italian Case"

Eytan Sheshinski (Hebrew University)
"Bounded Rationality and Retirement"



12:20 - 13:30




13:30 - 15:00

Second Session: Pensions and Incentives

Richard Ippolito (George Mason University)
"Pensions and Incentives"

Richard Disney (University of Nottingham)
Edward Whitehouse (Axia Economics)
"Pension Plans and Retirement Decisions"

Sven Schreiber (Free University of Berlin)
"Pensions and the Strategic Prevention of Unemployment"


15:00 - 15:30



15:30 - 16:45

Third Session: Political Economy

Franco Modigliani (Massachusetts Institute of Technology)
Pedro Sainz de Baranda (Massachusetts Institute of Technology)
Marie-Louisa Ceprini (Massachusetts Institute of Technology)
"Opportunities for Social Security Reform in Spain and Italy"


Monday, May 21

9:30 - 12:00

First Session: Early Retirement

David Wise (Harvard University)
"Social Security Programs and Retirement Around the World"

Costas Meghir (University College London and IZA)
Sarah Smith (Financial Services Authority)
Richard Blundell (University College London and IZA)
"Pension Incentives and the Pattern of Retirement in the UK"
[slides for this paper]

Reinhold Schnabel (University of Essen)
"Micro Modeling of Retirement Decisions in Germany"



12:00 - 13:00





Special Event: International Pensions Reform Forum

13:00 - 14:30

Panel Discussion

Chair: Klaus F. Zimmermann (IZA Bonn, DIW Berlin, and Bonn University)

Kenneth Apfel (University of Texas, former US Social Security Commissioner) [download paper]
Joseph Stiglitz (Stanford University and Sebago Associates, Inc.) [download paper]
David Wise (Harvard University)
Friedrich Breyer (University of Konstanz and DIW Berlin) [download paper]



14:30 - 15:00




15:00 - 16:15

Topic-focused Encounters

Joseph Stiglitz
Kenneth Apfel
David Wise



16:15 - 17:30

Final Get Together


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