Differentiating Retirement Age to Compensate for Health Differences

Vincent Vandenberghe

No 2020015, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Population ageing in Europe calls for an overall rise of the age of retirement. However, most observers agree that the latter should be differentiated to account for individuals' heterogeneous health when they grow older. This paper explores the relevance of this idea using European SHARE panel data. It first quantifies the health gradient across European countries, and within each of them across sociodemographic groups (i.e. genderXeducation) at typical retirement age. It then estimates the degree of retirement age differentiation that would be needed to equalise expected health at the moment of retirement. Results point at the need of a very high degree of differentiation to equalise expected health, across and within European countries. But the paper also shows that systematic retirement age differentiation would fail to match a significant portion of the full distribution of health status. In a world synonymous with systematic health-based retirement age differentiation, there would still be a lot of what health economists call F-mistakes ([F]ailure of treatment ie. no retirement for people in poor health) and E-mistakes ([E]xcessive treatment ie. people in good health going for retirement).

Keywords: Ageing; Health; Retirement Policy (search for similar items in EconPapers)
JEL-codes: I1 J14 J26 (search for similar items in EconPapers)
Date: 2020-04-14
New Economics Papers: this item is included in nep-age, nep-eur and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Differentiating retirement age to compensate for health differences (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2020015

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