Universal pension scheme and job searching

ABSTRACT

This paper examines whether a change in the amount of universal pension fund has any effect on a typical individual’s propensity to accept a job offer in the first period. The pension system will give the individual who is assumed to live for three periods a fixed amount in the third period regardless of his choice in the previous two periods to accept a job offer or not. It is found: with a grant in place after retirement, if a typical individual places much emphasis on current consumption, a rise in the grant will lead to an increase in his propensity to accept a job offer in the first period; in contrast, if future consumption is emphasized much, the opposite result will be obtained. Finally, the empirical evidence based on a questionnaire survey is provided to support the above-mentioned theoretical results.

KEYWORDS:

• Universal pension scheme
• job searching
• intertemporal consumer choice
• unemployment insurance

JEL CLASSIFICATION:

• D91
• J64
• J65

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplementary material

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