Hostname: page-component-78c5997874-fbnjt Total loading time: 0 Render date: 2024-11-10T12:09:00.107Z Has data issue: false hasContentIssue false
  • English
  • Français

Differential mortality, aging and social security: delaying the retirement age when educational spillovers matter

Published online by Cambridge University Press:  11 January 2016

GILLES LE GARREC  and
STÉPHANE LHUISSIER
GILLES LE GARREC
Affiliation:
OFCE − Sciences Po, 69 quai d'Orsay, 75340 Paris cedex 07, France (e-mail: gilles.legarrec@sciencespo.fr)
STÉPHANE LHUISSIER
Affiliation:
CEPII, 113 rue de Grenelle, 75007 Paris, France
Get access Rights & Permissions [Opens in a new window]

Abstract

To lower the forecasted increase in the social security burden linked to population aging, delaying the legal age of retirement has been privileged throughout industrialized countries. Compared with a uniform delay, some argue that those who have entered precociously the labor market should be allowed to retire earlier. They assert that such a ‘long career’ exception is all the more justified that those unskilled workers live also less long due to heavier and potentially health-damaging jobs. In this paper, we then study macroeconomic and distributional consequences of global gain in life expectancy, with or without the postponement of the legal age of retirement and with or without a ‘long career’ exception. By considering a framework where individuals decide to acquire skills depending on economic incentives and differential mortality, we focus particularly on spillover effects possibly generated by education. We show in particular that introducing a ‘long career’ exception cannot be to the advantage of future unskilled workers unless education yields no spillover effects.

Keywords

H55J31D63Social securityhuman capitalinequality
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 16 , Special Issue 3: Financial Knowledge and Key Retirement Outcomes , July 2017 , pp. 395 - 418
Copyright
Copyright © Cambridge University Press 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. and Angrist, J. (2000) How large are human capital externalities? Evidence from compulsory schooling laws. NBER Macroeconomics Annual, 15: 9–59.Google Scholar
Acemoglu, D. and Johnson, S. (2007) Disease and development: the effect of life expectancy on economic growth. Journal of Political Economy, 115(6): 925–985.Google Scholar
Andolfatto, D., Ferrall, C., and Gomme, P. (2000) Life-cycle learning, earning, income and wealth. mimeo, November.Google Scholar
Aubert, P. (2003) Plus d'un salarié du privé sur cinq a plus de 50 ans en 2000. Insee Première, no 910.Google Scholar
Aubert, P. and Bachelet, M. (2012) Disparités de montant de pension et redistribution dans le système de retraite français, in Insee. L’économie française, Insee - Références: 45–62.Google Scholar
Aubert, P. and Crépon, B. (2003) La productivité des salariés âgés: une tentative d'estimation. Economie et Statistique, 363: 95–119. English version: age, wage and productivity: firm-level evidence. Mimeo, (2006).Google Scholar
Ben-Porath, Y. (1967) The production of human capital and the life cycle of earnings. Journal of Political Economy, 75: 352–365.Google Scholar
Blöndal, S. and Scarpetta, S. (1998) The retirement decision in OECD countries. OECD working paper no 202.Google Scholar
Boucekkine, R., de la Croix, D., and Licandro, O. (2002) Vintage human capital, demographic trends, and endogenous growth. Journal of Economic Theory, 104: 340–375.CrossRefGoogle Scholar
Bozio, A. (2004) Does increasing contribution length lead to higher retirement age? Evidence from the 1993 French pension reform. mimeo, October.Google Scholar
Bozio, A. and Piketty, T. (2008) Pour un nouveau système de retraite: Des comptes individuels de cotisations financés par répartition. Paris: Collection du CEPREMAP, éditions Rue d'Ulm.Google Scholar
Bowles, S. and Gintis, H. (2002) The inheritance of inequality. Journal of Economic Perspective, 16(3): 3–30.CrossRefGoogle Scholar
Breyer, F. and Hupfeld, S. (2009) Fairness of public pensions and old-age poverty. FinanzArchiv: Public Finance Analysis, 65(3): 358–380.Google Scholar
Brown, J., Coronado, J. L., and Fullerton, D. (2006) The progressivity of social security. NBER Papers on Retirement Research Center Projects, NB06–10, December.Google Scholar
Burkhauser, R. and Walick, J. (1981) Disentangling the annuity from the redistributive aspects of social security in United States. Review of Income and Wealth, 28: 401–422.Google Scholar
Cahuc, P. and Michel, P. (1996) Minimum wage unemployment and growth. European Economic Review, 40(7): 1463–1482.Google Scholar
Cambois, E., Robine, J. M., and Hayward, M. D. (2001) Social inequalities in disability-free life expectancy in the French male population, 1980–1991. Demography, 38(4): 513–24.Google Scholar
Cambois, E., Laborde, C., and Robine, J.-M. (2008) La << double peine >> des ouvriers: plus d'années d'incapacité au sein d'une vie plus courte. Population § Sociétés, no 441, INED.>+des+ouvriers:+plus+d'années+d'incapacité+au+sein+d'une+vie+plus+courte.+Population+§+Sociétés,+no+441,+INED.>Google Scholar
Canton, E. (2007) Social returns to education: macro-evidence. De Economist, 155(4): 449–468.Google Scholar
Casamatta, G., Cremer, H., and Pestieau, P. (2000) The political economy of social security. Scandinavian Journal of Economics, 102(3): 503–522.Google Scholar
Cervellati, M. and Sunde, U. (2005) Human capital formation, life expectancy, and the process of development. American Economic Review, 95(5): 1653–1672.Google Scholar
Cervellati, M. and Sunde, U. (2011) Life expectancy and economic growth: the role of the demographic transition. Journal of Economic Growth, 16(2): 99–133.Google Scholar
Cigno, A. (2008) Is there a social security tax wedge? Labour Economics, 15(1): 68–77.Google Scholar
Coronado, J. L., Fullerton, D., and Glass, T. (1999) Distributional impacts of proposed changes to the social security system. NBER WP 6989, March.Google Scholar
Coronado, J. L., Fullerton, D., and Glass, T. (2000) The progressivity of social security. NBER WP 7520, February.CrossRefGoogle Scholar
Cremer, H., De Donder, P., Maldonado, D., and Pestieau, P. (2007) Voting over type and generosity of a pension system when some individuals are myopic. Journal of Public Economics, 91: 2041–2061.CrossRefGoogle Scholar
Crépon, B., Deniau, N., and Pérez-Duarte, S. (2003) Productivité et salaire des travailleurs âgés. Revue Française d'Economie, 18(1): 157–185. English version: wages, productivity, and worker characteristics: a French perspective. Working paper CREST-INSEE.CrossRefGoogle Scholar
d'Addio, A. C. (2007) Intergenerational transmission of disadvantage: mobility or immobility across generations? OECD social, employment and migration working papers 52, OECD Publishing.Google Scholar
Deaton, A. and Paxton, C. (1998) Aging and inequality in income and health. American Economic Review, 88(2): 248–253.Google Scholar
Deaton, A. and Paxton, C. (1999) Mortality, education, income and inequality among American cohort. NBER WP 7140, May.Google Scholar
de la Croix, D. (2009) Adult longevity and economic take-off from Malthus to Ben-Porath. In Salvadori, N. (ed.), Institutional and Social Dynamics of Growth and Distribution. Edward Elgar, chap. 8, pp. 172–190.Google Scholar
de la Croix, D. and Licandro, O. (1999) Life expectancy and endogenous growth. Economics Letters, 65: 255–263.Google Scholar
Docquier, F. and Paddison, O. (2003) Social security benefit rules, growth and inequality. Journal of Macroeconomics, 25: 47–71.CrossRefGoogle Scholar
Feldstein, M. S. (1976) Social security and saving: the extended life cycle theory. American Economic Review, 66(2): 77–86.Google Scholar
Garrett, D. (1995) The effects of differential mortality rates on the progressivity of social security. Economic Inquiry, 33(3): 457–475.CrossRefGoogle Scholar
Goda, G. S., Shoven, J., and Slavov, S. N. (2011) Differential mortality by income and social security progressivity. In Wise, D. (ed.), Explorations in the Economics of Aging. Chicago: University of Chicago Press for NBER, pp. 189–204.CrossRefGoogle Scholar
Gruber, J. and Wise, D. (eds.) (1999) Social Security and Retirement around the World. Chicago: University of Chicago Press.Google Scholar
Gustman, A. and Steinmeier, T. (2001) How effective is redistribution under the social security benefit formula? Journal of Public Economics, 82: 1–28.Google Scholar
Hachon, C. (2010) Do Beveridgian pension systems increase growth? Journal of Population Economics, 23: 825–831.Google Scholar
Hairault, J.-O., Langot, F., and Sopraseuth, T. (2005) A quantitative investigation of the laffer curve on the continued work tax: the French case. IZA DP n o 1499, February.Google Scholar
Hellerstein, J., David, N., and Troske, K. (1999) Wages, productivity and worker characteristics: evidence from plant level production function and wage equations. Journal of Labor Economics, 17: 409–446.Google Scholar
Huggett, M., Ventura, G., and Yaron, A. (2006) Human capital and earnings distribution dynamics. Journal of Monetary Economics, 53(2): 265–290.Google Scholar
INSEE (2006) Enquêtes Emploi, INSEE.Google Scholar
Jayachandran, S. and Lleras-Muney, A. (2009) Life expectancy and human capital investments: evidence from maternal mortality declines. Quarterly Journal of Economics, 124(1): 349–398.Google Scholar
Juillard, M. (1996) Dynare: a program for the resolution and simulation of dynamic models with forward variables through the use of a relaxation algorithm. WP n o 9602, CEPREMAP.Google Scholar
Kalemli-Ozcan, S., Ryder, H., and Weil, D. (2000) Mortality decline, human capital investment, and economic growth. Journal of Development Economics, 62: 1–23.Google Scholar
Laaksonen, M., Rahkonen, O., Karvonen, S., and Lahelma, E. (2005) Socioeconomic status and smoking: analysing inequalities with multiple indicators. European Journal of Public Health, 15(3): 262–269.Google Scholar
Le Garrec, G. (2012) Social security, income inequality and growth. Journal of Pension Economics and Finance, 11(1): 53–70.Google Scholar
Le Garrec, G. (2015) Increased longevity and social security reform: questioning the optimality of individual accounts when education matters. Journal of Population Economics, 28(2): 329–352.Google Scholar
Lillard, L. (1977) Inequality: earnings vs. human capital. American Economic Review, 67(2): 42–53.Google Scholar
Lindbeck, A. and Persson, M. (2003) The gains from pension reform. Journal of Economic Literature, 41(1): 74–112.Google Scholar
Mésonnier, J.-S. (2005) L'orientation de la politique monétaire à l'aune du taux d'intérêt “naturel”: une application à la zone euro. Bulletin de la Banque de France, 136: 41–57.Google Scholar
Mincer, J. (1988) Job training, wage growth, and labor turn-over. NBER Working Paper n° 2690. In Studies in Human Capital. Collected Essays of Jacob Mincer, 1993, E. Elger Publishing, Ch 8.Google Scholar
Mincer, J. (1997) The production of human capital and the life cycle of earnings: variations on a theme. Journal of Labor Economics, 15(1), Part 2: S26–S47.Google Scholar
Michel, P. and Pestieau, P. (2000) Retraite par répartition et âge de la retraite. Revue Economique, 51: 15–30.Google Scholar
Michel, P. and Pestieau, P. (2013) Social security and early retirement in an overlapping-generations growth model. Annals of Economic and Finance, 14(2): 705–719.Google Scholar
Moretti, E. (2004) Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data. Journal of Econometrics, 121: 175–212.Google Scholar
Neal, D. and Rosen, S. (2000) Theories of the distribution of earnings. In Atkinson, A. and Bourguignon, F. (eds), Handbook of Income Distribution. Amsterdam: Elsevier, pp. 379–427.Google Scholar
OECD (1998) Work-force ageing in OECD countries. In OECD Employment Outlook. OECD Publishing, Ch. 4, pp. 123–151.Google Scholar
OECD (2007) Pensions at a glance: public policies across OECD countries. OECD Publishing.Google Scholar
Rauch, J. (1993) Productivity gains from geographic concentration of human capital: evidence from the cities. Journal of Urban Economics, 34(3): 380–400.Google Scholar
Soares, R. (2005) Mortality reductions, educational attainment, and fertility choice. American Economic Review, 95(3): 580–601.CrossRefGoogle ScholarPubMed
Sommacal, A. (2006) Pension systems and intragenerational redistribution when labor supply is endogenous. Oxford Economic Papers, 58(3): 379–406.Google Scholar
Soto, M. (2002) Rediscovering education in growth regression. Working Paper No. 202, OECD Development Centre.Google Scholar
Stahlberg, A.-C. (1990) Life cycle income redistribution of the public sector: inter- and intra-generational effects. In Persson, , I. (ed.), Generating Equality in the Welfare State. Oslo: Norvegian University Press, pp. 97–121.Google Scholar
United Nations (2009) World Population Prospects: The 2008 Revision. Department of Economic and Social Affairs, Population Division.Google Scholar
van Ours, J. and Stoeldraijer, L. (2011) Age, wage and productivity in Dutch manufacturing. De Economist, 159: 113–137.Google Scholar