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Intergenerational transfers, mandatory retirement and economic growth

Author

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  • Lars Kunze

    (TU Dortmund University)

Abstract

This paper investigates the relationship between economic growth and the mandatory retirement age in an overlapping generations model with family altruism. It is shown that the relationship between the mandatory retirement age and economic growth is inverted U-shaped so that an increase in the mandatory retirement age beyond its growth-maximizing level may harm growth if bequests are not operative within the family whereas the growth effect is unambiguously positive with operative bequests. Our findings highlight the importance of intergenerational transfers in determining the overall growth effect.

Suggested Citation

  • Lars Kunze, 2025. "Intergenerational transfers, mandatory retirement and economic growth," Economics Bulletin, AccessEcon, vol. 45(4), pages 1744-1754.
    • Handle: RePEc:ebl:ecbull:eb-25-00374
    as

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    References listed on IDEAS

    as
    1. Carlos Bethencourt & Lars Kunze & Fernando Perera‐Tallo, 2025. "Partially funded social security and growth," Metroeconomica, Wiley Blackwell, vol. 76(2), pages 297-310, May.
    2. Lei Shao & Jie Zhang, 2024. "Retirement wealth, earnings risks, and intergenerational links," Economic Inquiry, Western Economic Association International, vol. 62(4), pages 1494-1519, October.
    3. Luciano Fanti, 2015. "Growth, PAYG pension systems crisis and mandatory age of retirement," Economics Bulletin, AccessEcon, vol. 35(2), pages 1160-1167.
    4. Lambrecht, Stephane & Michel, Philippe & Vidal, Jean-Pierre, 2005. "Public pensions and growth," European Economic Review, Elsevier, vol. 49(5), pages 1261-1281, July.
    5. Gonzalez-Eiras, Martín & Niepelt, Dirk, 2012. "Ageing, government budgets, retirement, and growth," European Economic Review, Elsevier, vol. 56(1), pages 97-115.
    6. Brian Nolan & Juan C. Palomino & Philippe Van Kerm & Salvatore Morelli, 2022. "Intergenerational wealth transfers in Great Britain from the Wealth and Assets Survey in comparative perspective," Fiscal Studies, John Wiley & Sons, vol. 43(2), pages 179-199, June.
    7. Hung-ju Chen & Koichi Miyazaki, 2020. "Labor productivity, labor supply of the old, and economic growth," Economics Bulletin, AccessEcon, vol. 40(1), pages 277-285.
    8. Lars Kunze, 2014. "Mandatory retirement and economic growth: An inverted U-shaped relationship," Economics Bulletin, AccessEcon, vol. 34(2), pages 885-891.
    9. Zhang, Jie & Zhang, Junsen, 2009. "Longevity, Retirement, And Capital Accumulation In A Recursive Model With An Application To Mandatory Retirement," Macroeconomic Dynamics, Cambridge University Press, vol. 13(3), pages 327-348, June.
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    Keywords

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    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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