Jonathan Gruber and David Wise (Eds.), Social Security Programs and Retirement Around the World: Micro Estimation.

Jonathan Gruber and David Wise (Eds.), Social Security Programs and Retirement Around the World: Micro Estimation. Chicago: University of Chicago Press, 2004, $99.00 hardcover.

Social Security Programs and Retirement Around the World: Micro Estimation presents analyses of the effects of structural incentives to retire on labor force participation rates among older workers in each of twelve OECD nations. All of these nations, with the exception of Japan, are in North America or Western Europe. Each chapter (other than the introduction) reports results for a different OECD nation. Both editors are distinguished economists. Jonathan Gruber is a professor of economics at MIT and David Wise is a professor of political economy at the John E Kennedy School of government at Harvard University. As contributors the editors have managed to assemble an impressive list of thirty-one economists most of whom are affiliated with institutions outside the United States.

This book presents the results for the second stage of an ongoing research project sponsored by the National Bureau of Economic Research. The overall project is dedicated to the study of the relationship between the structure of social security systems and labor force participation among older workers. This volume is the second of what the editors hope will eventually be at least three volumes to come out of the project. The first, published in 1999 and titled Social Security and Retirement Around the World, was also edited by Gruber and Wise.

It is very likely that the most widely read and useful single chapter in this book will prove to be the clearly written and forty page "Introduction and Summary" by Gruber and Wise that precedes Chapter 1. This introduction seeks to summarize the major findings presented in the other twelve country specific chapters. It presents numerous summary charts and tables based on comparative data from all twelve countries. It also lays out the goals of the project and situates this second volume within the context of the larger project. To this end, they review what was done in the 1999 volume and distinguish how the goals of this book different from that book.

In the 1999 volume, the objective was to describe the incentives inherent in social security systems in the countries under study and then to relate those incentives to the labor force participation of older workers. In that volume they found that in many of these countries the social security systems provided strong incentives for older workers to leave the labor force. The research in that first volume also established that there is a causal impact of many of the structural characteristics of these social security systems on labor force participation. However, that research did not provide estimates of the strength of the likely effects on labor force participation among older workers in response to various possible changes in the structure of these schemes. That is the gap that this second volume seeks to fill. For example, it addresses such questions as how much retirement age would be likely to change in response to this or that change in the provisions of the scheme in a particular country. The current volume does not attempt to present an historical analysis of the development of the social security systems in these countries. Rather, the focus is on the presentation of the results derived from simulation models.

Each chapter makes use of simulations based on micro-data for one specific country and attempts to measure the link between structural incentives in the social security scheme and the decision to retire. A strength of working with this type of data and these simulation models is that they provide a way to test whether or not incentive effects linked to a particular structural characteristic differ or are very similar across countries. Their results suggest that the incentive effects are very similar and this helps rule out alternative explanations based on cultural differences between countries. Another advantage of the micro-data based simulation models is that they offer a way to estimate the likely change in labor force participation rates for different categories of workers in response to various possible changes in the current provisions in these social security schemes. One of the conclusions of this study is that "ellipsisa reform that delays benefit eligibility by three years would likely reduce the proportion of men age fifty-six to sixty-five out of the labor force between 23 and 36 percentellipsis"

The structure of the chapters 1 through 12 is very similar. Basically the same type of analysis is done in each chapter so as to facilitate the comparison of results across nations and the preparation of summary tables based on results for all twelve nations. The quality of the analysis is consistently strong throughout the book. The target audience for this book is graduate students in economics and professional labor economists with an interest in retirement behavior. It will be all but impossible for graduate students in sociology and social work to grasp much of the analysis presented in this book and certainly the fine points unless they happen to have strong backgrounds in econometrics and experience working with simulation models.

John B. Williamson

Boston College