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Longevity and Life‐cycle Savings

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  • David E. Bloom
  • David Canning
  • Bryan Graham

Abstract

We add health and longevity to a standard model of life‐cycle saving and show that, under plausible assumptions, increases in life expectancy lead to higher savings rates at every age, even when retirement is endogenous. In a stationary population these higher savings rates are offset by increased old age dependency, but during the disequilibrium phase, when longevity is rising, the effect on aggregate savings rates can be substantial. We find empirical support for this effect using a cross‐country panel of national savings rates.

Suggested Citation

  • David E. Bloom & David Canning & Bryan Graham, 2003. "Longevity and Life‐cycle Savings," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 319-338, September.
    • Handle: RePEc:bla:scandj:v:105:y:2003:i:3:p:319-338
    DOI: 10.1111/1467-9442.t01-1-00001
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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