Heterogeneity in Longevity, Redistribution, and Pension Reform

Julian Diaz Saavedra ()
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Julian Diaz Saavedra: Department of Economic Theory and Economic History, University of Granada.
Authors registered in the RePEc Author Service: Julián Díaz-Saavedra

No 21/07, ThE Papers from Department of Economic Theory and Economic History of the University of Granada.

Abstract: The gap in the life expectancy of the elderly across educational groups is high, and this will probably increase over the coming decades. In this article, we use a computable overlapping generations model economy to show that the long-term link between heterogeneity in longevity and education could translate into an implicit tax/subsidy on the expected lifetime benefits to lifetime payroll taxes ratio, with rates around 10 percent, and that such rates pervert redistributive objectives of pension systems. We then analyze some parametric changes aimed at restoring the progressiveness of these systems in the long run, and find that a higher minimum pension or changes in the pension benefit formula go a long way as a tools to restore the system’s long-term progressivity.

Keywords: Computable general equilibrium; social security reform; redistribution. (search for similar items in EconPapers)
JEL-codes: C68 H23 H55 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2021-09-26
New Economics Papers: this item is included in nep-age, nep-cwa and nep-dge
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http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers21_07.pdf (application/pdf)

Related works:
Journal Article: Heterogeneity in longevity, redistribution, and pension reform (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:gra:wpaper:21/07

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