Invest as You Go: How Public Health Investment Keeps Pension Systems Healthy

Paolo Melindi-Ghidi and Willem Sas
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Willem Sas: KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven

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Abstract: Better health not only boosts longevity in itself, it also postpones the initial onset of disability and chronic inrmity to a later age. In this paper we examine the potential eects of such compression of morbidity' on pensions, and introduce a health-dependent dimension to the standard pay-as-you-go (PAYG) pension scheme. Studying the long-term implications of such a system in a simple overlapping generations framework, we nd that an increase in public health investment can augment capital accumulation in the long run. Because of this, the combination of health investment with a partially health-dependent PAYG scheme may in fact outperform a purely PAYG system in terms of lifetime welfare.

Keywords: health investment; disability pension; long-term care; PAYG pension system; OLG model (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-age, nep-dge and nep-hea
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01171701
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Citations: View citations in EconPapers (1)

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Working Paper: Invest as You Go: How Public Health Investment Keeps Pension Systems Healthy (2015)
Working Paper: Invest as you go: how public health investment keeps pension systems healthy (2015)
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