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Mortality transition and differential incentives for early retirement

  • Hippolyte D'Albis


    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - 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)

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
Date of revision:
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
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