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Mortality transition and differential incentives for early retirement

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Author Info

  • Hippolyte D'Albis

    ()
    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne)

  • Paul Lau Sau-Him

    (HKU - School of Economics and Finance - University of Hong Kong)

  • Miguel Sanchez-Romero

    (mpidr - Max Planck Institute for Demographic Research - Max Planck Institute)

Abstract

Many studies specify human mortality patterns parametrically, with a parameter change affecting mortality rates at different ages simultaneously. Motivated by the stylized fact that a mortality decline affects primarily younger people in the early phase of mortality transition but mainly older people in the later phase, we study how a mortality change at an arbitrary age affects optimal retirement age. Using the Volterra derivative for a functional, we show that mortality reductions at older ages delay retirement unambiguously, but that mortality reductions at younger ages may lead to earlier retirement due to a substantial increase in the individual's expected lifetime human wealth.

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Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00659868.

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Date of creation: Jan 2012
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Publication status: Published, Journal of Economic Theory, 2012, 147, 1, 261-283
Handle: RePEc:hal:cesptp:hal-00659868

Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00659868
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Keywords: mortality decline; incentive for early retirement; years-to-consume effect; lifetime human wealth effect;

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  1. Visite guidée au coeur des travaux du Meilleur jeune économiste 2012 (1/2)
    by Matthieu Solignac in Regards croisés sur l'économie on 2012-05-28 19:26:09
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Cited by:
  1. Miguel Sánchez Romero & Joze Sambt & Alexia Prskawetz, 2012. "Quantifying the role of alternative pension reforms on the Austrian economy," MPIDR Working Papers WP-2012-026, Max Planck Institute for Demographic Research, Rostock, Germany.
  2. Emin Gahramanov & Xueli Tang, 2013. "Solving for the Retirement Age in a Continuous-time Model with Endogenous Labor Supply," Economics Series 2013_5, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  3. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española, IEF, vol. 200(1), pages 41-74, March.
  4. Sau-Him Lau, 2013. "Does longevity improvement always raise the length of schooling through the longer-horizon mechanism?," 2013 Meeting Papers 292, Society for Economic Dynamics.
  5. Matteo Cervellati & Uwe Sunde, 2013. "Life Expectancy, Schooling, and Lifetime Labor Supply: Theory and Evidence Revisited," Econometrica, Econometric Society, vol. 81(5), pages 2055-2086, 09.
  6. Strulik, Holger & Werner, Katharina, 2013. "50 is the new 30: Long-run trends of schooling and retirement explained by human aging," Center for European, Governance and Economic Development Research Discussion Papers 152, University of Goettingen, Department of Economics.
  7. Strulik, Holger & Werner, Katharina, 2012. "Life expectancy, labor supply, and long-run growth: Reconciling theory and evidence," Center for European, Governance and Economic Development Research Discussion Papers 141, University of Goettingen, Department of Economics.
  8. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2012. "Optimal choice of health and retirement in a life-cycle model," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 01/2012, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
  9. Pierre Pestieau & Grégory Ponthière, 2012. "The public economics of increasing longevity," Working Papers halshs-00676492, HAL.

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