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Reforming retirement age in DB and DC pension systems in an aging OLG economy with heterogenous agents

Author

Listed:
  • Joanna Tyrowicz

    (University of Warsaw
    National Bank of Poland)

  • Krzysztof Makarski

    (National Bank of Poland
    Warsaw School of Economics)

  • Marcin Bielecki

    (University of Warsaw
    National Bank of Poland)

Abstract

We analyze the effects of increasing the retirement age in two economies with overlapping generations and within cohort ex ante heterogeneity. The first economy has a defined benefit system, and the second economy is in transition from a defined benefit to a defined contribution. We find that if increase in the retirement age is phased in a way that allows agents to adjust, welfare is not reduced and welfare effects have a similar magnitude and between-cohort distribution in both types of the pension systems.

Suggested Citation

  • Joanna Tyrowicz & Krzysztof Makarski & Marcin Bielecki, 2016. "Reforming retirement age in DB and DC pension systems in an aging OLG economy with heterogenous agents," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-36, December.
    • Handle: RePEc:spr:izalpo:v:5:y:2016:i:1:d:10.1186_s40173-016-0067-8
    DOI: 10.1186/s40173-016-0067-8
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    More about this item

    Keywords

    Retirement age; DB; DC; Pension system reform; Longevity; JEL codes; C60; C68; D63; E17; E21; H55;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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