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http://hdl.handle.net/10419/55307
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| Title: | | Longevity, life-cycle behavior and pension reform  |
| Authors: | | Haan, Peter Prowse, Victoria |
| Issue Date: | | 2011 |
| Series/Report no.: | | Discussion papers // German Institute for Economic Research 1140 |
| Abstract: | | How can public pension systems be reformed to ensure fiscal stability in the face of increasing life expectancy? To address this pressing open question in public finance, we estimate a life-cycle model in which the optimal employment, retirement and consumption decisions of forward-looking individuals depend, inter alia, on life expectancy and the design of the public pension system. We calculate that, in the case of Germany, the fiscal consequences of the 6.4 year increase in age 65 life expectancy anticipated to occur over the 40 years that separate the 1942 and 1982 birth cohorts can be offset by either an increase of 4.34 years in the full pensionable age or a cut of 37.7% in the per-year value of public pension benefits. Of these two distinct policy approaches to coping with the fiscal consequences of improving longevity, increasing the full pensionable age generates the largest responses in labor supply and retirement behavior. |
| Subjects: | | life expectancy public pension reform retirement employment life-cycle models consumption tax and transfer system |
| JEL: | | D91 J11 J22 J26 J64 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des DIW DIW-Diskussionspapiere
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