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    Longevity adjustment of retirement age and intragenerational inequality

    Hougaard Jensen, S. and Sigurdsson, T. and Zoega, Gylfi (2020) Longevity adjustment of retirement age and intragenerational inequality. Economica , ISSN 0013-0427. (In Press)

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    We find that segments of society who have shorter life expectancy can expect a lower income from their pensions and lifetime utility due to the longevity of other groups participating in the same pension scheme. Linking the pension age to average life expectancy magnifies the negative effect on the lifetime utility of those who suffer low longevity. Furthermore, when the income of those with greater longevity increases, those with shorter life expectancy become even worse off. Conversely, when the income of those with shorter life expectancy increases, they end up paying more into the pension scheme, which benefits those who live longer. The relative sizes of the low and high longevity groups in the population determine the magnitude of these effects. We calibrate the model based on data on differences in life expectancy of different socio-economic groups and find that low-income workers suffer from a 10-13 percent drop in pension benefits from being forced to pay into the same scheme as high-income workers.


    Item Type: Article
    Additional Information: This is the peer reviewed version of the article, which has been published in final form at the link above. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving
    Keyword(s) / Subject(s): Longevity, pension age, retirement, inequality.
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Gylfi Zoega
    Date Deposited: 12 Nov 2020 14:10
    Last Modified: 17 Jun 2021 03:05


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