Behavioural assumptions in labour economics. Analysing social security reforms and labour market transitions

  • Thomas van Huizen Thomas van Huizen

The thesis consists of two parts: Part I evaluates theoretical policy proposals and Part II tests empirically several behavioural assumptions in labour economics. Part I contains two chapters that assess the labour market effects of introducing savings accounts into the system of social security. Chapter 2 examines the labour market effects of replacing the existing unemployment insurance system by unemployment accounts. The study reveals that the impact of UAs depends crucially on the assumptions on time preferences. Next, the labour market consequences of life course schemes are analysed in Chapter 3. It is demonstrated that life course schemes may have important labour supply effects if they significantly increase savings and if these increased savings affect labour supply decisions. Basically, the first part of the thesis points out behavioural assumptions that are key to the effectiveness of social security savings accounts.

Part II examines these critical assumptions empirically. How do time preferences affect job search behaviour, career investments and labour market transitions? Can job search behaviour be described by an exponential or hyperbolic discounting model? These questions are analysed in Chapter 4 and 5. Next, Chapter 6 examines how wealth and liquidity constraints affect labour supply decisions, focusing on the intensive margin (i.e. working hours).

The final chapter summarizes the main results and, using the empirical findings from Part II, reconsiders the effects of social security savings accounts. Moreover, several general implications for labour market policies and social security systems are discussed. The concluding chapter also points out some limitations of the studies and provides an outlook for future research.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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