Increasing life expectancy and optimal retirement:does population aging necessarily undermine economic prosperity?
Klaus Prettner () and
David Canning ()
PGDA Working Papers from Program on the Global Demography of Aging
In this paper we analyze the e ects of changes in longevity and the pace of technological progress on interest rates, savings behaviour and optimal retirement decisions. In so doing we embed the dynamic optimization problem of choosing a life-cycle consumption path and the retirement age into a general equilibrium setting. Thereby we assume that technology evolves exogenously and the production side of the economy can be described by means of a neoclassical production function. Our results show that (i) the aggregate capital to consumption ratio increases and interest rates decrease in response to increases in longevity; (ii) the response of the optimal retirement age to increases in longevity is ambiguous. However, for reasonable parameter values the optimal retirement age increases in longevity; (iii) the aggregate capital to consumption ratio decreases and interest rates increase in response to faster technological progress; (iv) the response of the optimal retirement age to faster technological progress is ambiguous. However, for reasonable parameter values the optimal retirement age increases in the pace of technological improvements.
Keywords: endogenous retirement; life-cycle savings; population aging; technological progress; economic prosperity (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.hsph.harvard.edu/pgda/WorkingPapers/2012/PGDA_WP_91.pdf [301 Moved Permanently]--> https://www.hsph.harvard.edu/pgda/WorkingPapers/2012/PGDA_WP_91.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:gdm:wpaper:9112
Access Statistics for this paper
More papers in PGDA Working Papers from Program on the Global Demography of Aging
Bibliographic data for series maintained by Cinzia Smothers (). This e-mail address is bad, please contact .