Social security and longevity

Arbeitspapier

Many countries face the problem of how to reform social security systems to cope with increasing life expectancy. This raises questions concerning both distribution and risk sharing across generations. These issues are addressed within an OLG model with stochastic life expectancy across generations and endogenous retirement decisions. The social optimum is shown to imply that retirement age should be proportional to longevity. Moreover, increasing longevity calls for pre-funding even if the utility of all generations is weighted equal to the objective discount rate. The social optimum cannot be decentralized due to a conflict between incentives and risk sharing. The implications of stylized social security systems for risk sharing and retirement incentives are analyzed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1577

Classification and Topics

• Classification: Wirtschaft ; Demographic Trends, Macroeconomic Effects, and Forecasts ; Demographic Economics: Public Policy ; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination ; Social Security and Public Pensions
• Subject: Sozialreform ; Gesetzliche Rentenversicherung ; Altersgrenze ; Alternde Bevölkerung ; Sterblichkeit ; Generationenbeziehungen ; Pareto-Optimum ; Soziale Wohlfahrtsfunktion ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Andersen, Torben M.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/19041
• Last update: 10.03.2025, 11:42 AM CET