Department of Economics and Business Economics

Intergenerational redistribution and risk sharing with changing longevity

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Intergenerational redistribution and risk sharing with changing longevity. / Andersen, Torben M.

In: Journal of Economics, 2014, p. 1-27.

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

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@article{0c37fe4183cc42dc90b7a5a3a2612084,
title = "Intergenerational redistribution and risk sharing with changing longevity",
abstract = "Trend increases in longevity are a global phenomenon challenging the fiscal sustainability of current welfare arrangements. Policy proposals abound and often build on implicit assertions concerning intergenerational equity. This paper offers a simple but manageable OLG model with endogenous retirement and cohort-specific longevity to address intergenerational redistribution and risk sharing. While it is well known that a utilitarian planner strives for consumption smoothing, it is shown that healthy ageing calls for work smoothing in the sense that retirement ages increase with longevity. Hence, cohorts with higher longevity should contribute to their larger consumption needs via later retirement, although it is shown that the planner still front-loads some financing (pre-saving). Stochastic longevity raises the issue of intergenerational risk sharing, which implies that cohorts turning out to have a high longevity are compensated at the expense of cohorts turning out to have a relatively short longevity.",
keywords = "Longevity, Retirement, Pre-funding, Risk sharing",
author = "Andersen, {Torben M.}",
note = "Campus adgang til artiklen / Campus access to the article",
year = "2014",
doi = "10.1007/s00712-013-0336-6",
language = "English",
pages = "1--27",
journal = "Journal of Economics",
issn = "0931-8658",
publisher = "Springer Wien",

}

RIS

TY - JOUR

T1 - Intergenerational redistribution and risk sharing with changing longevity

AU - Andersen, Torben M.

N1 - Campus adgang til artiklen / Campus access to the article

PY - 2014

Y1 - 2014

N2 - Trend increases in longevity are a global phenomenon challenging the fiscal sustainability of current welfare arrangements. Policy proposals abound and often build on implicit assertions concerning intergenerational equity. This paper offers a simple but manageable OLG model with endogenous retirement and cohort-specific longevity to address intergenerational redistribution and risk sharing. While it is well known that a utilitarian planner strives for consumption smoothing, it is shown that healthy ageing calls for work smoothing in the sense that retirement ages increase with longevity. Hence, cohorts with higher longevity should contribute to their larger consumption needs via later retirement, although it is shown that the planner still front-loads some financing (pre-saving). Stochastic longevity raises the issue of intergenerational risk sharing, which implies that cohorts turning out to have a high longevity are compensated at the expense of cohorts turning out to have a relatively short longevity.

AB - Trend increases in longevity are a global phenomenon challenging the fiscal sustainability of current welfare arrangements. Policy proposals abound and often build on implicit assertions concerning intergenerational equity. This paper offers a simple but manageable OLG model with endogenous retirement and cohort-specific longevity to address intergenerational redistribution and risk sharing. While it is well known that a utilitarian planner strives for consumption smoothing, it is shown that healthy ageing calls for work smoothing in the sense that retirement ages increase with longevity. Hence, cohorts with higher longevity should contribute to their larger consumption needs via later retirement, although it is shown that the planner still front-loads some financing (pre-saving). Stochastic longevity raises the issue of intergenerational risk sharing, which implies that cohorts turning out to have a high longevity are compensated at the expense of cohorts turning out to have a relatively short longevity.

KW - Longevity

KW - Retirement

KW - Pre-funding

KW - Risk sharing

U2 - 10.1007/s00712-013-0336-6

DO - 10.1007/s00712-013-0336-6

M3 - Journal article

SP - 1

EP - 27

JO - Journal of Economics

JF - Journal of Economics

SN - 0931-8658

ER -