Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/201239
Authors: 
Lassila, Jukka
Valkonen, Tarmo
Year of Publication: 
2014
Series/Report no.: 
ETLA Working Papers No. 24
Abstract: 
Can longer working lives bring sufficient tax revenues to pay for the growing public health and care expenditure that longer lifetimes cause? We review studies concerning retirement decisions and pension policies, the role of mortality in health and long-term care costs, and errors in mortality projections. We combine key results into a numerical OLG model where changes in mortality have direct effects both on working careers and on per capita use of health and long-term care services. The model has been calibrated to the Finnish economy and demographics. Although there are huge uncertainties concerning future health and long-term care expenditure when people live longer, our simulations show that without policies directed to disability admission rules and old-age pension eligibility ages, working lives are unlikely to extend sufficiently. But, importantly, with such policies it seems quite possible that generations enjoying longer lifetimes can also pay for the full costs by working longer.
Subjects: 
life expectancy
working careers
health and long-term care expenditure
fiscal sustainability
JEL: 
H30
H63
H68
J11
Document Type: 
Working Paper

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