The Genesis of the Golden Age - Accounting for the Rise in Health and Leisure

31 Pages Posted: 30 Aug 2012

See all articles by Carl‐Johan Dalgaard

Carl‐Johan Dalgaard

University of Copenhagen - Department of Economics

Holger Strulik

University of Goettingen (Gottingen) - School of Law, Economics, Social Sciences

Date Written: August 1, 2012

Abstract

We develop a life cycle model featuring an optimal retirement decision in the presence of physiological aging. In modeling the aging process we draw on recent advances within the fields of biology and medicine. In the model individuals decide on optimal consumption during life, the age of retirement, and (via health investments) the timing of their death. Accordingly, 'years in retirement' is fully endogenously determined. Using the model we can account for the evolution of age of retirement and longevity across cohorts born between 1850 and 1940 in the US. Our analysis indicates that 2/3 of the observed increase in longevity can be accounted for by wage growth, whereas the driver behind the observed rising age of retirement appears to have been technological change in health care. Both technology and income contribute to the rise in years in retirement, but the contribution from income is slightly greater.

Keywords: aging, longevity, retirement, health, health technology

JEL Classification: D91, I15, J17, J26

Suggested Citation

Dalgaard, Carl-Johan Lars and Strulik, Holger, The Genesis of the Golden Age - Accounting for the Rise in Health and Leisure (August 1, 2012). Univ. of Copenhagen Dept. of Economics Discussion Paper No. 12-10, Available at SSRN: https://ssrn.com/abstract=2138051 or http://dx.doi.org/10.2139/ssrn.2138051

Carl-Johan Lars Dalgaard (Contact Author)

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
+45 3532 4407 (Phone)

Holger Strulik

University of Goettingen (Gottingen) - School of Law, Economics, Social Sciences ( email )

Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
48
Abstract Views
892
PlumX Metrics