Uncertain Length of Life, Retirement Age, and Optimal Pension Design

Thomas Aronsson () and Sören Blomquist
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Thomas Aronsson: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden, http://www.econ.umu.se

No 957, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: 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; work hours pension policy (search for similar items in EconPapers)
JEL-codes: D61 D80 H21 H55 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2018-03-02
New Economics Papers: this item is included in nep-age, nep-dem and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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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:hhs:umnees:0957

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