Longevity, Growth and Intergenerational Equity - The Deterministic Case

Torben M. Andersen and Marias H. Gestsson

Economics from Department of Economics, Central bank of Iceland

Abstract: Challenges raised by ageing (increasing longevity) have prompted policy debates featuring policy proposals justified by reference to some notion of intergenerational equity. However, very different policies ranging from pre-savings to indexation of retirement ages have been justified in this way. We develop an overlapping generations model in continuous time which encompasses different generations with different mortality rates and thus longevity. Allowing for trend increases in both longevity and productivity, we address the issue of intergenerational equity under a utilitarian criterion when future generations are better off in terms of both material and non-material well being. Increases in productivity and longevity are shown to have very different implications for intergenerational distribution.

Date: 2010-10
New Economics Papers: this item is included in nep-age, nep-dge and nep-ltv
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