Inequality and Defined Benefit Pensions when Life Expectancy is Heterogeneous

Daniel Kemptner (), Peter Haan and Victoria Prowse

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: In this paper, we analyze how life expectancy-driven redistribution of income through a defined pension benefit system impacts on inequality in annual consumption. Our analysis combines a methodology that quantifies life expectancy-driven redistribution through the pension system with a structural life-cycle model in which labor supply, retirement and consumption decisions respond to changes in the pension system. Based on the estimated model, we show that the German pension system induces a large regressive redistribution of life-time income, and this redistribution increases inequality in average annual consumption. Behavioral responses to the pension system matter for the results. Increasing progressivity in pension contributions or pension benefits only partially offsets the life expectancy-driven redistribution via the pension system.

JEL-codes: C61 D31 H55 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-age, nep-dem and nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/112867/1/VfS_2015_pid_449.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112867

Access Statistics for this paper

More papers in VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().