On the Heterogeneity in Longevity among Socioeconomic Groups: Scope, Trends, and Implications for Earnings-Related Pension Schemes

Mercedes Ayuso, Jorge Bravo and Robert Holzmann

No 10060, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Heterogeneity in longevity between socioeconomic groups is increasingly documented for developed economies and is reviewed in the paper. Heterogeneity in life expectancy disaggregated by main socioeconomic characteristics – such as age, gender, race, health, education, profession, income, and wealth – is sizable and has not declined in recent decades. The prospects for future decline are not strong, either; perhaps even to the contrary. As heterogeneity is closely linked to income or earnings (i.e., the contribution base of earnings-related social programs such as pensions) and as heterogeneity is empirically sizable, the result is major implicit taxes for some groups – particularly the less educated and low earners – and major subsidies for other groups – particularly highly educated individuals and high-income earners. The implications for pension reform and scheme design are substantial as taxes/subsidies counteract the envisaged effects of (i) a closer contribution-benefit link, (ii) a later formal retirement age to address population aging, and (iii) more individual funding and private annuities to compensate for reduced public generosity.

Keywords: gender; life expectancy; implicit subsidy; lifetime income; implicit tax (search for similar items in EconPapers)
JEL-codes: D9 G22 H55 J13 J14 J16 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-07
New Economics Papers: this item is included in nep-age, nep-eur, nep-lab and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published - published in: Global Journal of Human Social Sciences-Economics, 2017, 17 (1), 33-58

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