The Genesis of the Golden Age - Accounting for the Rise in Health and Leisure
We develop a life cycle model featuring an optimal retirement decision in the presence of physiological aging. In modeling the aging process we draw on recent advances within the fields of biology and medicine. In the model individuals decide on optimal consumption during life, the age of retirement, and (via health investments) the timing of their death. Accordingly, "years in retirement" is fully endogenously determined. Using the model we can account for the evolution of age of retirement and longevity across cohorts born between 1850 and 1940 in the US. Our analysis indicates that 2/3 of the observed increase in longevity can be accounted for by wage growth, whereas the driver behind the observed rising age of retirement appears to have been technological change in health care. Both technology and income contribute to the rise in years in retirement, but the contribution from income is slightly greater.
|Date of creation:||Aug 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark|
Phone: (+45) 35 32 30 10
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wolfe, John R, 1985. "A Model of Declining Health and Retirement," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1258-67, December.
- Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
- Sala-i-Martin, Xavier X, 1996.
" A Positive Theory of Social Security,"
Journal of Economic Growth,
Springer, vol. 1(2), pages 2a77-304, June.
- Strulik, Holger, 2013.
"Optimal aging with uncertain death,"
Center for European, Governance and Economic Development Research Discussion Papers
160, University of Goettingen, Department of Economics.
- Gruber, Jonathan & Wise, David, 1998. "Social Security and Retirement: An International Comparison," American Economic Review, American Economic Association, vol. 88(2), pages 158-63, May.
- Martin Browning & Mette Ejrnæs, 2009.
"Consumption and Children,"
The Review of Economics and Statistics,
MIT Press, vol. 91(1), pages 93-111, February.
- Heijdra, Ben J. & Romp, Ward E., 2009.
"Retirement, pensions, and ageing,"
Journal of Public Economics,
Elsevier, vol. 93(3-4), pages 586-604, April.
- Mariacristina De Nardi & Eric French & John B. Jones, 2010.
"Why Do the Elderly Save? The Role of Medical Expenses,"
Journal of Political Economy,
University of Chicago Press, vol. 118(1), pages 39-75, 02.
- Mariacristina De Nardi & Eric French & John Bailey Jones, 2009. "Why do the Elderly Save? The Role of Medical Expenses," NBER Working Papers 15149, National Bureau of Economic Research, Inc.
- Mariacristina De Nardi & Eric French & John Bailey Jones, 2009. "Why do the elderly save? the role of medical expenses," Working Paper Series WP-09-02, Federal Reserve Bank of Chicago.
- Hazan, Moshe & Zoabi, Hosny, 2005.
"Does Longevity Cause Growth?,"
CEPR Discussion Papers
4931, C.E.P.R. Discussion Papers.
- Robert J. Barro & N. Gregory Mankiw & Xavier Sala-i-Martin, 1992.
"Capital Mobility in Neoclassical Models of Growth,"
NBER Working Papers
4206, National Bureau of Economic Research, Inc.
- Barro, R. & Mankiw, G., 1992. "Capital Mobility in Neoclassical Models of Growth," Harvard Institute of Economic Research Working Papers 1615, Harvard - Institute of Economic Research.
- Barro, R.J. & Mankiw, N.G. & Sala-i-Martin, X., 1992. "Capital Mobility in Neoclassical Models of Growth," Papers 655, Yale - Economic Growth Center.
- Robert J. Barro & N. Gregory Mankiw & Xavier Sala-i-Martin, 1994. "Capital mobility in Neoclassical models of growth," Economics Working Papers 82, Department of Economics and Business, Universitat Pompeu Fabra.
- Barro, Robert J. & Mankiw, N Gregory & Sala-i-Martin, Xavier, 1994. "Capital Mobility in Neoclassical Models of Growth," CEPR Discussion Papers 1019, C.E.P.R. Discussion Papers.
- Matteo Cervellati & Uwe Sunde, 2005.
"Human Capital Formation, Life Expectancy, and the Process of Development,"
American Economic Review,
American Economic Association, vol. 95(5), pages 1653-1672, December.
- Cervellati, Matteo & Sunde, Uwe, 2005. "Human capital formation, life expectancy, and the process of development," Munich Reprints in Economics 20083, University of Munich, Department of Economics.
- Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2011.
"Optimal Choice of Health and Retirement in a Life-Cycle Model,"
Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis
48681, Verein für Socialpolitik / German Economic Association.
- 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.
- Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2012. "Optimal choice of health and retirement in a life-cycle model," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 01/2012, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
- Moshe Hazan, 2009. "Longevity and Lifetime Labor Supply: Evidence and Implications," Econometrica, Econometric Society, vol. 77(6), pages 1829-1863, November.
- Diego Restuccia & Guillaume Vandenbroucke, 2012.
"A Century of Human Capital and Hours,"
tecipa-460, University of Toronto, Department of Economics.
- Oded Galor & Omer Moav, 2007. "The Neolithic Revolution and Contemporary Variations in Life Expectancy," Working Papers 2007-14, Brown University, Department of Economics.
- Strulik, Holger & Werner, Katharina, 2012.
"Life Expectancy, Labor Supply, and Long-Run Growth: Reconciling Theory and Evidence,"
Hannover Economic Papers (HEP)
dp-497, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
- Strulik, Holger & Werner, Katharina, 2012. "Life expectancy, labor supply, and long-run growth: Reconciling theory and evidence," Center for European, Governance and Economic Development Research Discussion Papers 141, University of Goettingen, Department of Economics.
- Berndt, Ernst R. & Cutler, David M. & Frank, Richard G. & Griliches, Zvi & Newhouse, Joseph P. & Triplett, Jack E., 2000. "Medical care prices and output," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 3, pages 119-180 Elsevier.
- Chulhee Lee, 2001. "The expected length of male retirement in the United States, 1850-1990," Journal of Population Economics, Springer, vol. 14(4), pages 641-650.
- Casper Hansen & Lars Lønstrup, 2012. "Can higher life expectancy induce more schooling and earlier retirement?," Journal of Population Economics, Springer, vol. 25(4), pages 1249-1264, October.
- Ehrlich, Isaac & Chuma, Hiroyuki, 1990. "A Model of the Demand for Longevity and the Value of Life Extension," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 761-82, August.
- Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
- Raj Chetty, 2003.
"A New Method of Estimating Risk Aversion,"
NBER Working Papers
9988, National Bureau of Economic Research, Inc.
- Carl-Johan Dalgaard & Holger Strulik, 2010. "Optimal Aging and Death," PGDA Working Papers 5810, Program on the Global Demography of Aging.
- Titus Galama & Arie Kapteyn & Raquel Fonseca & Pierre-Carl Michaud, 2008. "Grossman's Health Threshold and Retirement," Working Papers 658, RAND Corporation Publications Department.
When requesting a correction, please mention this item's handle: RePEc:kud:kuiedp:1210. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann)
If references are entirely missing, you can add them using this form.