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Mortality transition and differential incentives for early retirement

Author

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  • Hippolyte d'Albis

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Paul Lau Sau-Him

    (HKU - School of Economics and Finance - HKU - The University of Hong Kong)

  • Miguel Sanchez-Romero

    (MPIDR - Max Planck Institute for Demographic Research - Max-Planck-Gesellschaft)

Abstract

Many studies specify human mortality patterns parametrically, with a parameter change affecting mortality rates at different ages simultaneously. Motivated by the stylized fact that a mortality decline affects primarily younger people in the early phase of mortality transition but mainly older people in the later phase, we study how a mortality change at an arbitrary age affects optimal retirement age. Using the Volterra derivative for a functional, we show that mortality reductions at older ages delay retirement unambiguously, but that mortality reductions at younger ages may lead to earlier retirement due to a substantial increase in the individual's expected lifetime human wealth.

Suggested Citation

  • Hippolyte d'Albis & Paul Lau Sau-Him & Miguel Sanchez-Romero, 2012. "Mortality transition and differential incentives for early retirement," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00659868, HAL.
    • Handle: RePEc:hal:cesptp:hal-00659868
    DOI: 10.1016/j.jet.2011.11.004
    Note: View the original document on HAL open archive server: https://hal.science/hal-00659868
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    References listed on IDEAS

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    More about this item

    Keywords

    mortality decline; incentive for early retirement; years-to-consume effect; lifetime human wealth effect;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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