The Unemployment Effects of Proposed Changes in Social Security's “Normal Retirement Age” |
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Authors: | Franklin Michello William Ford |
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Institution: | (1) Department of Finance, Middle Tennessee State University, Murfreesboro, TN 37132, USA |
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Abstract: | This paper identifies and analyzes an inherent conflict
between some proposed U. S. Social Security reform measures,
which would encourage delayed retirement decisions,
and the objective of minimizing the economy's unemployment rate. Using recent demographic trends in the age
composition of the U.S. labor force, the study suggests that
such proposed U.S. Social Security reform measures may
actually increase the economy's unemployment rate. It concludes
that measures to encourage older workers would
relieve labor market pressures (while also helping the
Social Security system) if and only if unemployment was
persistently near the non-accelerating inflation rate of
unemployment (NAIRU). However, in an economy with
above NAIRU unemployment, which has been the case
most often in recent years, the opposite Social Security policy
logic would apply.
JEL Classification H557 |
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Keywords: | Social Security reform NAIRU unemployment |
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