EconPapers    
Economics at your fingertips  
 

Why the Statutory Retirement Age Is Too Low in a Democracy

Berthold U. Wigger

Journal of Public Economic Theory, 2025, vol. 27, issue 3

Abstract: This paper examines the normative criteria for setting the statutory retirement age (SRA) under majority voting. It finds that when the working population forms the democratic majority, the SRA tends to be set inefficiently low. This inefficiency stems from a positive fiscal externality in pay‐as‐you‐go pension systems: workers determining the SRA do not consider the benefits that a higher retirement age provides to current pensioners. Using a continuous‐time overlapping generations model, the paper demonstrates that a Pareto improvement can be achieved by raising the SRA–provided it is accompanied by compensatory transfers from pensioners to workers at the time of the increase.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/jpet.70034

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:bla:jpbect:v:27:y:2025:i:3:n:e70034

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2025-07-02
Handle: RePEc:bla:jpbect:v:27:y:2025:i:3:n:e70034