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Mortality transition and differential incentives for early retirement

  • Hippolyte D'Albis

    ()

    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Paul Lau Sau-Him

    (HKU - School of Economics and Finance - University of Hong Kong)

  • Miguel Sanchez-Romero

    (mpidr - Max Planck Institute for Demographic Research - Max Planck Institute)

Many studies specify human mortality patterns parametrically, with a parameter change affecting mortality rates at different ages simultaneously. Motivated by the stylized fact that a mortality decline affects primarily younger people in the early phase of mortality transition but mainly older people in the later phase, we study how a mortality change at an arbitrary age affects optimal retirement age. Using the Volterra derivative for a functional, we show that mortality reductions at older ages delay retirement unambiguously, but that mortality reductions at younger ages may lead to earlier retirement due to a substantial increase in the individual's expected lifetime human wealth.

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Paper provided by HAL in its series PSE - Labex "OSE-Ouvrir la Science Economique" with number hal-00659868.

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Date of creation: Jan 2012
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Publication status: Published, Journal of Economic Theory, 2012, 147, 1, 261-283
Handle: RePEc:hal:pseose:hal-00659868
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00659868
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  1. Costa, Dora L., 1998. "The Evolution of Retirement," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226116082, May.
  2. Bloom, David E. & Canning, David & Mansfield, Richard K. & Moore, Michael, 2007. "Demographic change, social security systems, and savings," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 92-114, January.
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  11. Chang, Fwu-Ranq, 1991. "Uncertain Lifetimes, Retirement and Economic Welfare," Economica, London School of Economics and Political Science, vol. 58(230), pages 215-32, May.
  12. Hu, Sheng-Cheng, 1999. "Economic Growth in the Perpetual-Youth Model: Implications of the Annuity Market and Demographics," Journal of Macroeconomics, Elsevier, vol. 21(1), pages 107-124, January.
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  14. D'ALBIS Hippolyte & AUGERAUD-VERON Emmanuelle, 2007. "Endogenous Retirement and Monetary Cycles," LERNA Working Papers 07.14.235, LERNA, University of Toulouse.
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