Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145194
Authors: 
Ayuso, Mercedes
Bravo, Jorge Miguel
Holzmann, Robert
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 10060
Abstract: 
Heterogeneity in longevity between socioeconomic groups is increasingly documented for developed economies and is reviewed in the paper. Heterogeneity in life expectancy disaggregated by main socioeconomic characteristics – such as age, gender, race, health, education, profession, income, and wealth – is sizable and has not declined in recent decades. The prospects for future decline are not strong, either; perhaps even to the contrary. As heterogeneity is closely linked to income or earnings (i.e., the contribution base of earnings-related social programs such as pensions) and as heterogeneity is empirically sizable, the result is major implicit taxes for some groups – particularly the less educated and low earners – and major subsidies for other groups – particularly highly educated individuals and high-income earners. The implications for pension reform and scheme design are substantial as taxes/subsidies counteract the envisaged effects of (i) a closer contribution-benefit link, (ii) a later formal retirement age to address population aging, and (iii) more individual funding and private annuities to compensate for reduced public generosity.
Subjects: 
implicit subsidy
life expectancy
gender
lifetime income
implicit tax
JEL: 
D9
G22
H55
J13
J14
J16
Document Type: 
Working Paper

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