Increasing Longevity and Social Security Reforms

Torben Andersen

No 1789, CESifo Working Paper Series from CESifo

Abstract: Increasing longevity causes an upward trend in the dependency ratio in many countries. This raises concerns about the financial sustainability of social security schemes, and reform initiatives and proposals abound. It is shown that a fundamental policy choice inevitably arises since a given social security system cannot be maintained by simply indexing retirement ages and benefits to longevity. The political reform process is analysed using the so-called legislative procedure. When longevity increases, the young generation contributes more, and the old generation faces lower benefits and a retirement age that increases more than proportionally to the increase in longevity.

Keywords: longevity; social security; political economy (search for similar items in EconPapers)
JEL-codes: D72 H55 J11 J14 J18 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-ltv, nep-pbe and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1789

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