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Longevity, Health Spending, and Pay-as-you-Go Pensions

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Author Info

  • Pierre Pestieau
  • Gregory Ponthiere
  • Motohiro Sato

Abstract

This paper aims at investigating whether or not a utilitarian social planner should subsidize longevity-enhancing expenditures in an economy with a pay-as-you-go pension system. For that purpose, a two-period overlapping-generations model is developed, in which the probability of survival to the second period can be raised by private health spending. Focusing on the steady state, it is shown that the sign of the optimal subsidy on health expenditures tends to be negative when the replacement ratio is sufficiently large. Moreover, the optimal health subsidy is also shown to depend significantly on individual preferences and on the longevity production process.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 64 (2008)
Issue (Month): 1 (March)
Pages: 1-18

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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200803)64:1_1:lhsapp_2.0.tx_2-f

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Related research

Keywords: Longevity; health care; PAYG social security;

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Citations

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Cited by:
  1. Gregory Ponthiere, 2008. "Can underemployment persist in an expanding economy? Clues from a non-Walrasian OLG model with endogenous longevity," Economic Change and Restructuring, Springer, vol. 41(2), pages 97-124, June.
  2. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2008. "Should we subsidize longevity?," PSE Working Papers halshs-00586236, HAL.
  3. Grégory Ponthière, 2008. "Unequal longevities and lifestyles transmission," Working Papers halshs-00586010, HAL.
  4. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española, IEF, vol. 200(1), pages 41-74, March.
  5. Pierre Pestieau & Grégory Ponthiere, 2012. "On the Policy Implications of Changing Longevity," CESifo Working Paper Series 3926, CESifo Group Munich.
  6. Pierre-André Jouvet & Pierre Pestieau & Gregory Ponthiere, 2010. "Longevity and environmental quality in an OLG model," Journal of Economics, Springer, vol. 100(3), pages 191-216, July.
  7. Pierre Pestieau & Grégory Ponthière, 2012. "The public economics of increasing longevity," Working Papers halshs-00676492, HAL.
  8. Marie-Louise Leroux & Pierre Pestieau & Gregory Ponthiere, 2011. "Optimal linear taxation under endogenous longevity," Journal of Population Economics, Springer, vol. 24(1), pages 213-237, January.
  9. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2008. "Should we subsidize longevity?," Working Papers halshs-00586236, HAL.
  10. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2008. "Optimal linear taxation under endogenous longevity," Working Papers halshs-00586241, HAL.
  11. Hirazawa, Makoto & Saito, Koichi & Yakita, Akira, 2011. "Effects of international sharing of pollution abatement burdens on income inequality among countries," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1615-1625, October.

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