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Uncertain Lifetimes, Retirement and Economic Welfare

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  • Chang, Fwu-Ranq

Abstract

The effect of increased life expectancy on retirement age is ambiguous because a change in the survival probability is analogous to a change in intertemporal prices. It is shown that the decision to retire earlier or later depends on the old-age saving behavior. Early retirement could emerge if one saves in old age. It is also shown that the effect of intertemporal substitutions, arising from the imperfection of the annuity market, could produce a tilt to the reservation wage profile, which, in turn, makes early retirement possible. Copyright 1991 by The London School of Economics and Political Science.

Suggested Citation

  • Chang, Fwu-Ranq, 1991. "Uncertain Lifetimes, Retirement and Economic Welfare," Economica, London School of Economics and Political Science, vol. 58(230), pages 215-232, May.
  • Handle: RePEc:bla:econom:v:58:y:1991:i:230:p:215-32
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    Cited by:

    1. Chang, Fwu-Ranq, 2005. "A theory of health investment under competing mortality risks," Journal of Health Economics, Elsevier, vol. 24(3), pages 449-463, May.
    2. Eric French & John Bailey Jones, 2017. "Health, Health Insurance, and Retirement: A Survey," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 383-409, September.
    3. dʼAlbis, Hippolyte & Lau, Sau-Him Paul & Sánchez-Romero, Miguel, 2012. "Mortality transition and differential incentives for early retirement," Journal of Economic Theory, Elsevier, vol. 147(1), pages 261-283.
    4. Heijdra, Ben J. & Romp, Ward E., 2009. "Retirement, pensions, and ageing," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 586-604, April.
    5. Chang, Fwu-Ranq, 2004. "Life insurance, precautionary saving and contingent bequest," Mathematical Social Sciences, Elsevier, vol. 48(1), pages 55-67, July.
    6. Ryan Edwards, 2013. "The cost of uncertain life span," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1485-1522, October.
    7. Johansson, Per-Olov, 2002. "Defining the value of a statistical life: reply," Journal of Health Economics, Elsevier, vol. 21(1), pages 177-178, January.
    8. Torben Andersen & Mikkel Hermansen, 2014. "Durable consumption, saving and retirement," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(3), pages 825-840, July.
    9. Hippolyte D'Albis & Emmanuelle Augeraud-Veron, 2008. "Endogenous Retirement and Monetary Cycles," Mathematical Population Studies, Taylor & Francis Journals, vol. 15(4), pages 214-229.
    10. Stephan Humpert & Christian Pfeifer, 2011. "Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective," Working Paper Series in Economics 214, University of Lüneburg, Institute of Economics.
    11. Catherine Cazals, 1994. "La retraite dans les modèles d'offre de travail : un survol de la littérature," Économie et Prévision, Programme National Persée, vol. 115(4), pages 43-62.
    12. David E. Bloom & David Canning & Michael Moore, 2004. "The Effect of Improvements in Health and Longevity on Optimal Retirement and Saving," NBER Working Papers 10919, National Bureau of Economic Research, Inc.
    13. David E. Bloom & David Canning & Michael Moore, 2007. "A Theory of Retirement," PGDA Working Papers 2607, Program on the Global Demography of Aging.
    14. Per-Olov JOHANSSON, 2006. "On the definition and estimation of the value of a “statistical life”," Departmental Working Papers 2006-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    15. Bleichrodt, Han & Eeckhoudt, Louis, 2006. "Survival risks, intertemporal consumption, and insurance: The case of distorted probabilities," Insurance: Mathematics and Economics, Elsevier, vol. 38(2), pages 335-346, April.
    16. repec:dau:papers:123456789/6825 is not listed on IDEAS
    17. Johansson, Per-Olov, 2002. "On the Definition and Age-Dependency of the Value of a Statistical Life. A Review and Extension," SSE/EFI Working Paper Series in Economics and Finance 490, Stockholm School of Economics, revised 29 Jan 2002.
    18. Owen O'Donnell & Federica Teppa & Eddy van Doorslaer, 2008. "Can subjective survival expectations explain retirement behaviour?," DNB Working Papers 188, Netherlands Central Bank, Research Department.
    19. Owen O'Donnell & Eddy Van Doorslaer & Tom Van Ourti, 2013. "Health and Inequality," Tinbergen Institute Discussion Papers 13-170/V, Tinbergen Institute.

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