Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/208365
Authors: 
Sanchez-Romero, Miguel
Fürnkranz-Prskawetz, Alexia
Year of Publication: 
2019
Series/Report no.: 
ECON WPS No. 07/2019
Abstract: 
In this paper we investigate the impact of a reduction in the pension replacement rate on the schooling choice and on inequality. We develop an overlapping generations model in which individuals differ by their life expectancy and in the cost of attending schooling. Individuals optimally choose their consumption path and their educational attainment. Within our framework we first show how many progressive pension systems are ex ante regressive due to the difference in life expectancy across skill groups and, second, we derive the level of progressivity that restores an equal treatment of the pension system across skill groups.
Subjects: 
Human capital
Longevity
Inequality
Life cycle
Social security
Pension
Progressivity
JEL: 
E24
J10
J18
H55
Document Type: 
Working Paper

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