Annuity Market Imperfection, Retirement and Economic Growth

Ben Heijdra () and Jochen Mierau

No 2717, CESifo Working Paper Series from CESifo

Abstract: We study the effects of an annuity market imperfection on individual agents’ labour supply and retirement decisions and on the macroeconomic growth rate in an overlapping generations model with endogenous growth. We model imperfect annuities by introducing a load factor on the interest rate faced by finitely-lived agents. Our core model features age-independent wages and a constant mortality rate. In the first extension we study the implications for microeconomic decisions and macroeconomic outcomes of a hump-shaped life-cycle profile in labour productivity, whilst in the second extension we postulate a realistic mortality process. Our main findings are that the limited availability of annuities induces agents to retire early in the first two models, but later in the model with age-dependent mortality. In all cases, the general equilibrium repercussion is that economic growth is lower under imperfect annuities than with perfect annuities.

Keywords: annuity markets; retirement; endogenous growth; overlapping generations; demography (search for similar items in EconPapers)
JEL-codes: D52 D91 E10 J20 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp2717.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:ces:ceswps:_2717

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().