Department of Economics and Business Economics

Longevity, Growth and Intergenerational Equity: The Deterministic Case

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Challenges raised by aging (increasing longevity) have prompted policy debates featuring policy proposals justified by reference to some notion of intergenerational equity. However, very different policies ranging from presavings to indexation of retirement ages have been justified in this way. We develop an overlapping-generations model in continuous time that encompasses different generations with different mortality rates and thus longevity. Allowing for trend increases in both longevity and productivity, we address the normative issue of intergenerational equity under a utilitarian criterion when future generations are better off in terms of both material and nonmaterial well-being. Increases in productivity and longevity are shown to have very different implications for intergenerational distribution. Further, the socially optimal retirement age, dependency ratio, and intergenerational burden sharing in the case of a trend increase in longevity are shown to depend on how individuals' utility for time/leisure is affected by age and longevity.
Original languageEnglish
JournalMacroeconomic Dynamics
Pages (from-to)985-1021
Number of pages37
Publication statusPublished - Jun 2016

    Research areas

  • Demographics, Longevity, Retirement age, Healthy aging

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