Essays on joint retirement and sustainability of social security systems

Cetin, Sefane
(2023)

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Authors
  • Cetin, SefaneUCLouvain
    author
Supervisors
Hindriks, Jean
 ;
Vandenberghe, Vincent
Abstract
This thesis aims to deepen our understanding of couples’ retirement incentives, in particular those embodied in the social security system, and to evaluate the consequences of ageing on the sustainability of pensions. The first two chapters focus on the retirement incentives of married individuals and aim to exhibit spousal retirement spillovers. Chapter 1 provides cross-country evidence confirming the propensity of couples to coordinate their retirement decision. What is more, it shows that this propensity is not equally distributed: it depends on people’s position in the income distribution, as well as partners’ relative earnings potentials and it is shaped by the structure of social security system. The second chapter focuses on the social security-related financial determinants of spousal retirement spillovers. It documents indirect retirement incentives coming from the partner’s retirement benefits. Under the hypothetical elimination of the spousal retirement bonus in Belgium, the chapter documents the existence of substitution of retirement over time and among different labour-market exit routes, highlighting the interplay of retirement programs and intra-household retirement decisions. The third chapter deals with the question of the distribution of the cost of ageing across cohorts. It proposes a bargaining approach between generations to assess the political sustainability of the existing pension reforms enacted in the EU countries by the "democratic gap". The democratic gap is defined as the difference between the implicit bargaining power that sustains the projected pension benefits and the democratic weights defined as the population shares of the working and the retired groups. The strategy is similar to the inverse optimal tax approach in which implicit social weights correspond to the solution to the “inverse-optimum” program in the optimal tax literature. This chapter reveals a growing democratic gap for the pension reforms in several European countries.
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Cetin, S. (2023). Essays on joint retirement and sustainability of social security systems. https://hdl.handle.net/2078.5/100468