Kuhn, Michael Wrzaczek, Stefan Prskawetz, Alexia Feichtinger, Gustav
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Beiträge zur Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft: Lektionen aus der Krise - Session: The Life-Cycle Consumption Model No. E16-V1
We examine within a life-cycle set-up the choice of health and retirement. Health care contributes to a reduction in both mortality, determining the need to accumulate retirement wealth, and in morbidity, determining the disutility of work. The retirement age affects health through the value of survival and the value of morbidity reductions. We compare the allocation for a first-best setting where the individual can transfer wealth freely within a perfect annuity market with a second-best set-up with an incentive incompatible (yet actuarially fair) retirement scheme and an imperfect annuity market and show how the inefficiencies shape the health-retirement nexus.
annuities demand for health moral hazard life-cycle-model optimal control retirement value of life