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M. Sánchez-Romero, J. Sambt, A. Fürnkranz-Prskawetz:
"Quantifying the role of alternative pension reforms on the Austrian economy";
Report for TU Wien, Working Papers in Economic Theory and Policy; Report No. Working Paper No. 04, 2012; 44 pages.

This paper investigates the role of recent pension reforms for the development of
the social security system and economic growth in Austria. We use a computable
general equilibrium model that is built up of overlapping generations that differ
by their household structure, longevity, educational attainment, and capital
accumulation. Each household optimally decides over its consumption paths,
work effort, and retirement age according to the life-cycle theory of labor, while
they face survival risk. We find that the pension reforms implemented from
2000 to 2004, although in the correct direction, are not sufficient to solve the
labor market distortion caused by the Austrian PAYG pension system. Using
alternative policy options, our simulations indicate that a change to a notional
defined contribution system and an increase in the educational distribution of
the work force would increase the incentive for later retirement ages and thereby
increase labor supply and economic growth.