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Retirement Age and Health Expenditures

Author

Listed:
  • Pestieau, Pierre
  • Cremer, Helmuth
  • Lozachmeur, Jean-Marie

Abstract

This Paper studies the design of pension benefits and contributions when an individual?s health status (disutility of continued activity) is endogenous and depends on consumption of health services. Health services can be subsidized (in a linear or non-linear way, depending on the information structure). Uniform public provision of health services is also considered. We show that as with exogenous health status, the second-best policy may induce early retirement for some types of individuals. Furthermore, whatever the specific information structure considered (individual levels or anonymous transactions) for health services, a subsidization of health expenditures obtains under fairly plausible assumptions. Third, when the information structure permits only linear subsidies, the case for uniform public provision of health services (which can be supplemented but not resold) appears to be quite strong.

Suggested Citation

  • Pestieau, Pierre & Cremer, Helmuth & Lozachmeur, Jean-Marie, 2004. "Retirement Age and Health Expenditures," CEPR Discussion Papers 4774, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4774
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    Cited by:

    1. Helmuth Cremer & Jean‐Marie Lozachmeur & Pierre Pestieau, 2008. "Social Security And Retirement Decision: A Positive And Normative Approach," Journal of Economic Surveys, Wiley Blackwell, vol. 22(2), pages 213-233, April.
    2. Hostenkamp, Gisela & Stolpe, Michael, 2008. "Optimal health and retirement policies amid population aging," Kiel Working Papers 1428, Kiel Institute for the World Economy.
    3. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2015. "Optimal choice of health and retirement in a life-cycle model," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 186-212.

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