Health, Longevity and Pension Reform

Tobias Laun, Simen Markussen, Trond Christian Vigtel () and Johanna Wallenius
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Trond Christian Vigtel: Ragnar Frisch Centre for Economic Research

No 2018:9, Working Paper Series from Uppsala University, Department of Economics

Abstract: In this paper, we study alternative pension reforms designed to achieve fiscal sustainability in the face of demographic change. We are particularly interested in the heterogeneous effects across demographic groups, as improvements in health and longevity have not been uniform across the population. To this end, we develop a dynamic, structural life cycle model of heterogeneous agents who face health, mortality and income risk. We consider the following policy reform measures: (1) increasing the early access age to pensions, (2) raising income taxes, (3) lowering pension benefits and (4) lowering pension and disability benefits. We find that, of the considered policies, proportionally lowering pension and disability benefits results in the highest average welfare and the lowest degree of inequality. It is also successful at boosting employment, particularly among the less educated.

Keywords: Life cycle; Retirement; Disability insurance; Health (search for similar items in EconPapers)
JEL-codes: E24 J22 J26 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2018-05-08
New Economics Papers: this item is included in nep-age, nep-dge, nep-hea, nep-lma and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:2018_009

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