The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes

Marcin Bielecki, Karolina Goraus-Tańska, Jan Hagemejer and Joanna Tyrowicz

No 2014-12, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: We evaluate the welfare and macroeconomic effects of increasing the retirement age in the context of population aging. In an overlapping generations framework we simulate the increase of the retirement age by seven years under different pension systems (defined benefit, notionally defined contribution and fully funded). We show that raising the retirement wage is universally welfare enhancing for all living and future cohorts, regardless of the pension system. Quantitatively, this policy intervention is able to counterweight the adverse macroeconomic consequences of aging. We test the validity of our findings in a population with lower pace of aging due to higher fertility. Finally, we show scope for further welfare gains if productivity is relatively high at old ages.

Keywords: pension system; defined benefit; NDC; retirement age; pension system reform; welfare (search for similar items in EconPapers)
JEL-codes: C68 D72 E17 E25 H55 J11 J24 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2014
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP129.pdf First version, 2014 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2014-12

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