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Mortality transition and differential incentives for early retirement

Author Info

Listed author(s):
  • Hippolyte D'Albis

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • 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)

Abstract

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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Length:
Date of creation: Jan 2012
Publication status: Published in Journal of Economic Theory, Elsevier, 2012, 147 (1), pp.261-283. <10.1016/j.jet.2011.11.004>
Handle: RePEc:hal:pseose:hal-00659868
DOI: 10.1016/j.jet.2011.11.004
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00659868
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

Keywords: mortality decline; incentive for early retirement; years-to-consume effect; lifetime human wealth effect;

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Find related papers by JEL classification:
  • D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
  • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
  • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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  1. Zhang, Jie & Zhang, Junsen & Lee, Ronald, 2003. "Rising longevity, education, savings, and growth," Journal of Development Economics, Elsevier, vol. 70(1), pages 83-101, February.
  2. Hippolyte D'Albis & Emmanuelle Augeraud-Veron, 2008. "Endogenous Retirement and Monetary Cycles," Mathematical Population Studies, Taylor & Francis Journals, vol. 15(4), pages 214-229.
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  12. J. E. Stiglitz, 1999. "Introduction," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 28(3), pages 249-254, November.
  13. 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.
  14. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
  15. John Wilmoth & Shiro Horiuchi, 1999. "Rectangularization revisited: Variability of age at death within human populations," Demography, Springer;Population Association of America (PAA), vol. 36(4), pages 475-495, November.
  16. Moshe Hazan, 2009. "Longevity and Lifetime Labor Supply: Evidence and Implications," Econometrica, Econometric Society, vol. 77(6), pages 1829-1863, November.
  17. 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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