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Harsh occupations, life expectancy and social security

Listed author(s):
  • Pierre Pestieau
  • Maria Racionero

Should special pension provisions be offered to workers in harsh occupations? We address this question in an optimal tax setting where individuals differ in longevity and occupation. Longevity is private information but workers in harsh occupations have on average shorter lifes than workers in safe occupations. We adopt a weighted utilitarian social objective to partially redress the implicit redistribution from short- to long-lived individuals that the unweighted utilitarian objective entails. We show that there is a case for differentiating the social security policy by occupation. We also show that short-lived workers are induced to overconsume when young and to retire early in order to prevent mimicking by long-lived ones. This is achieved by taxing, often quite heavily, the savings and the earnings from prolonging activity of short-lived individuals.

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File URL: https://www.cbe.anu.edu.au/researchpapers/cepr/DP678.pdf
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Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 678.

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Date of creation: Jan 2013
Handle: RePEc:auu:dpaper:678
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  1. Asghar Zaidi & Edward R. Whitehouse, 2009. "Should Pension Systems Recognise "Hazardous and Arduous Work"?," OECD Social, Employment and Migration Working Papers 91, OECD Publishing.
  2. Cremer, Helmuth & Lozachmeur, Jean-Marie & Pestieau, Pierre, 2004. "Disability Testing and Retirement," CEPR Discussion Papers 4773, C.E.P.R. Discussion Papers.
  3. Emmanuelle Cambois & Caroline Laborde & Isabelle Romieu & Jean-Marie Robine, 2011. "Occupational inequalities in health expectancies in France in the early 2000s: Unequal chances of reaching and living retirement in good health," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 25(12), pages 407-436, August.
  4. PESTIEAU, Pierre & RACIONERO, Maria, 2013. "Harsh occupations, health status and social security," CORE Discussion Papers 2013001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. BOMMIER, Antoine & LEROUX, Marie-Louise & LOZACHMEUR, Jean-Marie, "undated". "Differential mortality and social security," CORE Discussion Papers RP 2285, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Pierre Pestieau & Grégory Ponthière, 2014. "Policy Implications of Changing Longevity," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-01053594, HAL.
  7. Pestieau, P. & Ponthiere, G., 2015. "Longevity Variations and the Welfare State," CORE Discussion Papers 2015027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Marc Fleurbaey & Marie-Louise Leroux & Grégory Ponthière, 2014. "Compensating the dead," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-01053598, HAL.
    • Marc Fleurbaey & Marie-Louise Leroux & Gregory Ponthiere, 2011. "Compensating The Dead," Working Papers 1370, Princeton University, Department of Economics, Econometric Research Program..
  9. Mao, Hong & Ostaszewski, Krzysztof M. & Wang, Yuling, 2014. "Optimal retirement age, leisure and consumption," Economic Modelling, Elsevier, vol. 43(C), pages 458-464.
  10. Geoffrey T. Sanzenbacher & Anthony Webb & Candace M. Cosgrove & Natalia S. Orlova, 2015. "Calculating Neutral Increases in Retirement Age by Socioeconomic Status," Working Papers, Center for Retirement Research at Boston College wp2015-21, Center for Retirement Research.
  11. CREMER, Helmuth & LOZACHMEUR, Jean-Marie & PESTIEAU, Pierre, "undated". "Social security, retirement age and optimal income taxation," CORE Discussion Papers RP 1722, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Bielecki, Marcin & Goraus, Karolina & Hagemejer, Jan & Tyrowicz, Joanna, 2016. "Decreasing fertility vs increasing longevity: Raising the retirement age in the context of ageing processes," Economic Modelling, Elsevier, vol. 52(PA), pages 125-143.
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