Fair retirement under risky lifetime
A premature death unexpectedly brings a life and a career to their end, leading to substantial welfare losses. We study the retirement decision in an economy with risky lifetime, and compare the laissez-faire with egalitarian social optima. We consider two social objectives: (1) the maximin on expected lifetime welfare (ex ante), allowing for a compensation for unequal life expectancies; (2) the maximin on realized lifetime welfare (ex post), allowing for a compensation for unequal lifetimes. The latter optimum involves, in general, decreasing lifetime consumption profiles, as well as raising the retirement age, unlike the ex ante egalitarian optimum. This result is robust to the introduction of unequal life expectancies and unequal productivities. Hence, the postponement of the retirement age can, quite surprisingly, be defended on egalitarian grounds - although the conclusion is reversed when mortality strikes only after retirement.
|Date of creation:||23 Sep 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vincent P. Crawford & David M. Lilien, 1981. "Social Security and the Retirement Decision," The Quarterly Journal of Economics, Oxford University Press, vol. 96(3), pages 505-529.
- Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2005.
"The Quantity and Quality of Life and the Evolution of World Inequality,"
American Economic Review,
American Economic Association, vol. 95(1), pages 277-291, March.
- Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2003. "The Quantity and Quality of Life and the Evolution of World Inequality," NBER Working Papers 9765, National Bureau of Economic Research, Inc.
- Antoine Bommier & Marie-Louise Leroux & Jean-Marie Lozachmeur, 2011.
"Differential mortality and social security,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 44(1), pages 273-289, February.
- Fleurbaey, Marc & Leroux, Marie-Louise & Ponthiere, Gregory, 2014.
"Compensating the dead,"
Journal of Mathematical Economics,
Elsevier, vol. 51(C), pages 28-41.
- Marc Fleurbaey & Marie-Louise Leroux & Gregory Ponthiere, 2011. "Compensating The Dead," Working Papers 1370, Princeton University, Department of Economics, Econometric Research Program..
- Marc Fleurbaey & Marie-Louise Leroux & Grégory Ponthière, 2014. "Compensating the dead," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-01053598, HAL.
- Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, 07.
- Cremer, Helmuth & Pestieau, Pierre, 2003.
"The Double Dividend of Postponing Retirement,"
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 10(4), pages 419-34, August.
- Cremer, Helmuth & Pestieau, Pierre, 2002. "The Double Dividend of Postponing Retirement," IDEI Working Papers 144, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2003.
- CREMER, Helmuth & PESTIEAU, Pierre, . "The double dividend of postponing retirement," CORE Discussion Papers RP 1696, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Helmuth Cremer & Jean-Marie Lozachmeur & Pierre Pestieau, 2002.
"Social Security, Retirement Age and Optimal Income Taxation,"
CESifo Working Paper Series
693, CESifo Group Munich.
- Cremer, Helmuth & Lozachmeur, Jean-Marie & Pestieau, Pierre, 2004. "Social security, retirement age and optimal income taxation," Journal of Public Economics, Elsevier, vol. 88(11), pages 2259-2281, September.
- CREMER, Helmuth & LOZACHMEUR, Jean-Marie & PESTIEAU, Pierre, . "Social security, retirement age and optimal income taxation," CORE Discussion Papers RP 1722, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Marc Fleurbaey, 2009.
"Assessing risky social situations,"
LSE Research Online Documents on Economics
27006, London School of Economics and Political Science, LSE Library.
- FLEURBAEY, Marc, . "Assessing risky social situations," CORE Discussion Papers RP 2289, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Marc Fleurbaey, 2007. "Assessing Risky Social Situations," IDEP Working Papers 0703, Institut d'economie publique (IDEP), Marseille, France, revised Jan 2007.
- Kahn, James A., 1988. "Social security, liquidity, and early retirement," Journal of Public Economics, Elsevier, vol. 35(1), pages 97-117, February.
- Fleurbaey, Marc, 2012.
"Fairness, Responsibility, and Welfare,"
Oxford University Press, number 9780199653591, December.
- Brouwer, Werner B.F. & van Exel, N. Job A., 2005. "Expectations regarding length and health related quality of life: Some empirical findings," Social Science & Medicine, Elsevier, vol. 61(5), pages 1083-1094, September.
- Deaton, A., 1998.
"Aging and Inequality in Income and Health,"
181, Princeton, Woodrow Wilson School - Development Studies.
- Harriet Orcutt Duleep, 1986. "Measuring the Effect of Income on Adult Mortality Using Longitudinal Administrative Record Data," Journal of Human Resources, University of Wisconsin Press, vol. 21(2), pages 238-251.
- Eytan Sheshinski, 1977.
"A Model of Social Security and Retirement Decisions,"
NBER Working Papers
0187, National Bureau of Economic Research, Inc.
- Sheshinski, Eytan, 1978. "A model of social security and retirement decisions," Journal of Public Economics, Elsevier, vol. 10(3), pages 337-360, December.
- MICHEL, Philippe & PESTIEAU, Pierre, .
"Optimal taxation of capital and labor income with social security and variable retirement age,"
CORE Discussion Papers RP
1614, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Philippe Michel & Pierre Pestieau, 2002. "Optimal Taxation of Capital and Labor Income with Social Security and Variable Retirement Age," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(2), pages 163-, May.
- Bertrand Crettez & Patricia Le Maitre, 2002. "Optimal age of retirement and population growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(4), pages 737-755.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2013049. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)
If references are entirely missing, you can add them using this form.