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Stimulating Annuity Markets

  • Trimborn, Timo
  • Mierau, Jochen O.
  • Heijdra, Ben J.

    (Groningen University)

We study the short-, medium-, and long-run implications of stimulating annuity markets in a dynamic general-equilibrium overlapping-generations model. We find that beneficial partial-equilibrium effects of stimulating annuity markets are counteracted by negative general-equilibrium repercussions. Balancing the positive partial-equilibrium and negative general-equilibrium forces we show that there exists some intermediate level of annuitization such that long-run welfare is maximized. Studying the transition to the optimal degree of annuitization shows that currently middle-aged individuals stand to gain most from the stimulation of annuity markets

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File URL: http://irs.ub.rug.nl/ppn/382644018
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Paper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 14015-EEF.

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Date of creation: 2014
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Handle: RePEc:dgr:rugsom:14015-eef
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  1. Carter, Lawrence R. & Lee, Ronald D., 1992. "Modeling and forecasting US sex differentials in mortality," International Journal of Forecasting, Elsevier, vol. 8(3), pages 393-411, November.
  2. Svetlana Pashchenko, 2010. "Accounting for non-annuitization," 2010 Meeting Papers 563, Society for Economic Dynamics.
  3. Heijdra, Ben J. & Mierau, Jochen O. & Reijnders, S. M., 2014. "A Tragedy Of Annuitization? Longevity Insurance In General Equilibrium," Macroeconomic Dynamics, Cambridge University Press, vol. 18(07), pages 1607-1634, October.
  4. Alexander Ludwig & Thomas Schelkle & Edgar Vogel, 2011. "Online Appendix to "Demographic Change, Human Capital and Welfare"," Technical Appendices 08-168, Review of Economic Dynamics.
  5. Pecchenino, Rowena A & Pollard, Patricia S, 1997. "The Effects of Annuities, Bequests, and Aging in an Overlapping Generations Model of Endogenous Growth," Economic Journal, Royal Economic Society, vol. 107(440), pages 26-46, January.
  6. Daehaeng Kim & Chul-In Lee, 2007. "On-the-Job Human Capital Accumulation in a Real Business Cycle Model: Implications for Intertemporal Substitution Elasticity and Labor Hoarding," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 494-518, July.
  7. Ludwig, Alexander & Schelkle, Thomas & Vogel, Edgar, 2010. "Demographic Change, Human Capital and Welfare," MEA discussion paper series 10196, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  8. Thomas Davidoff & Jeffrey R. Brown & Peter A. Diamond, 2003. "Annuities and Individual Welfare," NBER Working Papers 9714, National Bureau of Economic Research, Inc.
  9. Inkmann, Joachim & Lopes, Paula & Michaelides, Alexander, 2010. "How Deep is the Annuity Market Participation Puzzle?," CEPR Discussion Papers 7940, C.E.P.R. Discussion Papers.
  10. Ben J. Heijdra & Jochen O. Mierau, 2009. "Annuity Market Imperfection, Retirement and Economic Growth," CESifo Working Paper Series 2717, CESifo Group Munich.
  11. Ben J. Heijdra & Laurie S. M. Reijnders, 2012. "Human Capital Accumulation and the Macroeconomy in an Ageing Society," CESifo Working Paper Series 4046, CESifo Group Munich.
  12. Mathias Trabandt & Harald Uhlig, 2006. "How Far Are We From The Slippery Slope? The Laffer Curve Revisited," SFB 649 Discussion Papers SFB649DP2006-023, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  13. Lee Lockwood, 2012. "Bequest Motives and the Annuity Puzzle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 226-243, April.
  14. Bruce, Neil & Turnovsky, Stephen J., 2013. "Social security, growth, and welfare in overlapping generations economies with or without annuities," Journal of Public Economics, Elsevier, vol. 101(C), pages 12-24.
  15. Gary Hansen & Selahattin Imrohoroglu, 2008. "Consumption over the Life Cycle: The Role of Annuities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 566-583, July.
  16. Hansen, G D, 1993. "The Cyclical and Secular Behaviour of the Labour Input: Comparing Efficiency Units and Hours Worked," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(1), pages 71-80, Jan.-Marc.
  17. Ben J. Heijdra & Jochen O. Mierau & Laurie S. M. Reijnders, 2010. "The Tragedy of Annuitization," CESifo Working Paper Series 3141, CESifo Group Munich.
  18. Imrohoroglu, Ayse & Imrohoroglu, Selahattin & Joines, Douglas H, 1995. "A Life Cycle Analysis of Social Security," Economic Theory, Springer, vol. 6(1), pages 83-114, June.
  19. Feigenbaum, James & Gahramanov, Emin & Tang, Xueli, 2013. "Is it really good to annuitize?," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 116-140.
  20. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  21. Susumu Imai & Michael P. Keane, 2004. "Intertemporal Labor Supply and Human Capital Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 601-641, 05.
  22. Fehr, Hans & Habermann, Christian, 2008. "Welfare effects of life annuities: Some clarifications," Economics Letters, Elsevier, vol. 99(1), pages 177-180, April.
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