Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149870
Authors: 
Grossmann, Volker
Strulik, Holger
Year of Publication: 
2017
Series/Report no.: 
Discussion Papers, Center for European, Governance and Economic Development Research 302
Abstract: 
This paper integrates into public economics a biologically founded, stochastic process of individual ageing. The novel approach enables us to quantitatively characterize the optimal joint design of health and retirement policy behind the veil of ignorance for today and in response to future medical progress. Calibrating our model to Germany, we find that future progress in medical technology calls for a potentially drastic increase in health spending that typically should be accompanied by a lower pension savings rate and a higher retirement age. Interestingly, medical progress and higher health spending are in conflict with the goal to reduce health inequality.
Subjects: 
ageing
health expenditure
health inequality
social security system
retirement age
JEL: 
H50
I10
C60
Document Type: 
Working Paper

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