The interaction effects of rising life expectancy and the public pension burden on aggregate savings and economic growth

Lei He () and Zhengqi Wang
Additional contact information
Lei He: Hunan Normal University
Zhengqi Wang: Hunan Normal University

Portuguese Economic Journal, 2023, vol. 22, issue 2, No 4, 229-250

Abstract: Abstract We evaluate the interaction effects of rising life expectancy and the public pension burden on economic growth by proposing a theoretical model based on an overlapping generations framework. Testable implications from the theoretical model are that the public pension burden impairs the positive effect of increased life expectancy on the aggregate savings rate in the same period and reduces the positive effect of life expectancy on the economic growth rate in the next period. Meanwhile, rising life expectancy intensifies the negative effect of the public pension burden on the aggregate savings rate and economic growth. A panel data set on OECD countries is used to provide empirical support for these predictions. Our results reveal the complicated relationships among rising life expectancy, a high public pension burden, and growth. It would be valuable for the government sector to adjust its spending to deal with fiscal pressure from public pensions.

Keywords: Public pension burden; Life expectancy; Interaction effects; Economic growth; E21; H55; O11 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10258-022-00208-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:portec:v:22:y:2023:i:2:d:10.1007_s10258-022-00208-z

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10258/PS2

DOI: 10.1007/s10258-022-00208-z

Access Statistics for this article

Portuguese Economic Journal is currently edited by Luís F. Costa

More articles in Portuguese Economic Journal from Springer, Instituto Superior de Economia e Gestao
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().