Uncertain Length of Life, Retirement Age, and Optimal Pension Design
Thomas Aronsson and
No 6940, CESifo Working Paper Series from CESifo Group Munich
In this paper, we consider how the hours of work and retirement age ought to respond to a change in the uncertainty of the length of life. In a first best framework, where a benevolent government exercises perfect control over the individuals’ labor supply and retirement-decisions, the results show that a decrease in the standard deviation of life-length leads to an increase in the optimal retirement age and a decrease in the hours of work per period spent working. This result is robust, and is also derived in models of decentralized decision-making where individuals decide on their own consumption, labor supply, and retirement age, and where the government attempts to affect their behavior and welfare through redistribution and pension policy.
Keywords: uncertain lifetime; retirement age; work hours; pension policy (search for similar items in EconPapers)
JEL-codes: D61 D80 H21 H55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dem, nep-hea and nep-pbe
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Working Paper: Uncertain Length of Life, Retirement Age, and Optimal Pension Design (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6940
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