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Redistributive effects of the US pension system among individuals with different life expectancy

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  • Fürnkranz-Prskawetz, Alexia
  • Sanchez Romero, Miguel

Abstract

We investigate the differential impact that pension systems have on the labor supply and the accumulation of physical and human capital for individuals that differ by their learning ability and levels of life expectancy. Our analysis is calibrated to the US economy using a general equilibrium model populated by overlapping generations. Within our framework we analyze the redistributive and macroeconomic effects of a progressive versus a flat replacement rate of the pension system.

Suggested Citation

  • Fürnkranz-Prskawetz, Alexia & Sanchez Romero, Miguel, 2017. "Redistributive effects of the US pension system among individuals with different life expectancy," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168181, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc17:168181
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    References listed on IDEAS

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    1. Geppert, Christian, 2015. "On the Distributional Implications of Demographic Change," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113070, Verein für Socialpolitik / German Economic Association.
    2. Alexander Ludwig & Michael Reiter, 2010. "Sharing Demographic Risk--Who Is Afraid of the Baby Bust?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 83-118, November.
    3. Matteo Cervellati & Uwe Sunde, 2013. "Life Expectancy, Schooling, and Lifetime Labor Supply: Theory and Evidence Revisited," Econometrica, Econometric Society, vol. 81(5), pages 2055-2086, September.
    4. Ayuso, Mercedes & Bravo, Jorge Miguel & Holzmann, Robert, 2016. "On the Heterogeneity in Longevity among Socioeconomic Groups: Scope, Trends, and Implications for Earnings-Related Pension Schemes," IZA Discussion Papers 10060, Institute for the Study of Labor (IZA).
    5. Andrew G. Biggs, 2011. "Social Security," Books, American Enterprise Institute, number 6033, September.
    6. Jeffrey B. Liebman, 2002. "Redistribution in the Current U.S. Social Security System," NBER Chapters,in: The Distributional Aspects of Social Security and Social Security Reform, pages 11-48 National Bureau of Economic Research, Inc.
    7. Blinder, Alan S & Weiss, Yoram, 1976. "Human Capital and Labor Supply: A Synthesis," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 449-472, June.
    8. Sánchez-Romero, Miguel & Sambt, Jože & Prskawetz, Alexia, 2013. "Quantifying the role of alternative pension reforms on the Austrian economy," Labour Economics, Elsevier, vol. 22(C), pages 94-114.
    9. Alexander Ludwig & Thomas Schelkle & Edgar Vogel, 2012. "Demographic Change, Human Capital and Welfare," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 94-107, January.
    10. Adriana Lleras-Muney, 2005. "The Relationship Between Education and Adult Mortality in the United States," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 189-221.
    11. Pierre PESTIEAU & Gregory PONTHIERE, 2016. "Longevity Variations and the Welfare State," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 82(2), pages 207-239, June.
    12. Sánchez-Romero, Miguel & d׳Albis, Hippolyte & Prskawetz, Alexia, 2016. "Education, lifetime labor supply, and longevity improvements," Journal of Economic Dynamics and Control, Elsevier, vol. 73(C), pages 118-141.
    13. dʼAlbis, Hippolyte & Lau, Sau-Him Paul & Sánchez-Romero, Miguel, 2012. "Mortality transition and differential incentives for early retirement," Journal of Economic Theory, Elsevier, vol. 147(1), pages 261-283.
    14. repec:dau:papers:123456789/6825 is not listed on IDEAS
    15. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española, IEF, vol. 200(1), pages 41-74, March.
    16. Allen Kelley & Robert Schmidt, 2005. "Evolution of recent economic-demographic modeling: A synthesis," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(2), pages 275-300, June.
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    Cited by:

    1. Haan, Peter & Kemptner, Daniel & Lüthen, Holger, 2017. "The Rising Longevity Gap by Lifetime Earnings: Distributional Implications for the Pension System," IZA Discussion Papers 11121, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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