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The future of retirement in aging societies

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  • Teresa Ghilarducci

Abstract

Amongst the hallmarks of a civilized society are that both the rich and the poor experience increasing longevity, and that both groups are entitled to leisure at the end of their working lives. Yet, as the economic crises of 2008-2009 reduces the value of assets in pension funds an emerging political rhetoric suggests work for retirees is healthy and that pensions take resources from younger people. This study shows that spending for programs for the elderly does not displace spending for younger populations. Evidence from 58 nations reveals pension and education spending increase together, which suggests that when political forces are allied with the elderly and young families, social spending increases across groups. A 10% increase in spending on education (as a percent of GDP) is correlated with a 7.3% increase in spending on pensions. Evidence from the US - where older people have more choices than they had before about working at advanced ages - suggests that older workers are increasing their labor force participation because retirement income is eroding, rather than because older workers find work more attractive and easier to do. Advertisers may link youthfulness with doing paid work but, in the US, the elderly improve their health after retiring, controlling for other factors affecting health status.

Suggested Citation

  • Teresa Ghilarducci, 2010. "The future of retirement in aging societies," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(3), pages 319-331.
  • Handle: RePEc:taf:irapec:v:24:y:2010:i:3:p:319-331
    DOI: 10.1080/02692171003701511
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    References listed on IDEAS

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    1. Kalwij, A.S. & Vermeulen, F.M.P., 2005. "Labour Force Participation of the Elderly in Europe : The Importance of Being Healthy," Other publications TiSEM c00729b8-27dc-42f8-9fba-0, Tilburg University, School of Economics and Management.
    2. Antoine Bommier & Ronald Lee & Tim Miller & Stéphane Zuber, 2010. "Who Wins and Who Loses? Public Transfer Accounts for US Generations Born 1850 to 2090," Population and Development Review, The Population Council, Inc., vol. 36(1), pages 1-26, March.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. What do Social Security, Medicare and public investments have in common? They make us richer
      by Josh Bivens in Working Economics on 2012-08-23 01:29:46

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    Cited by:

    1. Liam A. Gallagher & Fionnuala Ryan, 2017. "A Portfolio Approach to Assessing an Auto-Enrolment Pension Scheme for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 48(4), pages 515-548.
    2. Philipp Müller & Joël Wagner, 2017. "The Impact of Pension Funding Mechanisms on the Stability and Payoff from Swiss DC Pension Schemes: A Sensitivity Analysis," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(3), pages 423-452, July.
    3. Codrina Rada, 2012. "The Economics of Pensions. Remarks on Growth, Distribution and Class Conflict," Working Paper Series, Department of Economics, University of Utah 2012_02, University of Utah, Department of Economics.

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