Retirement, Imperfect Annuity Markets and Aging
Casper Worm Hansen
Aarhus University - Department of Economics and Business; Netspar
University of Southern Denmark - Department of Business and Economics; Netspar
September 25, 2010
We show that the recent tendency of increasing labor force participation in age groups 55-59 and 60-65 can be explained by lower unintended bequests caused by the observed compression of mortality. This result arises from introducing imperfect annuity markets and uncertain survival into a model where individuals live in two overlapping generations. In addition, we show that annuity market imperfections may provide a utilitarian rationale for a public pay-as-you-go pension system that counterbalances the intergenerational transfer of wealth from unintended bequests.
Number of Pages in PDF File: 32
Keywords: Retirement, imperfect annuity markets, aging, pay-as-you-go pensions
JEL Classification: D52; D91; E21; H55; J10; J26working papers series
Date posted: June 8, 2010 ; Last revised: November 14, 2010
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