Active aging, education, retirement, and public pension design in a growing economy

I develop an endogenous growth model with overlapping generations in which individuals choose their schooling and retirement lengths, reflecting the complementarity between physical and human capital. I propose a public pension system that promotes active aging and lengthens schooling without increasing income inequality. In the baseline model, this system does not raise social welfare because additional labor supplied by the elderly reduces leisure and depresses wages, while the Ben-Porath–type human capital gains are negligible. However, if greater elderly labor participation generates even small positive externalities—such as stronger senior work communities, better working environments for older individuals, and reduced loneliness or illness—then such the pension system encouraging active aging can improve welfare for all generations.