Health, Pension Benefits and Longevity: How They Affect Household Savings?

21 Pages Posted: 15 Nov 2013

See all articles by Najat el Mekkaoui De Freitas

Najat el Mekkaoui De Freitas

Université Paris-Dauphine, Laboratoire d'Economie, DIAL ; Economic Research Forum (ERF)

Joaquim Oliveira Martins

CEPII, Paris; University Paris-Dauphine - PSL

Date Written: October 1, 2013

Abstract

This paper analyses the impact of health, pension systems and longevity on savings. It uses a simple life-cycle model embodying social transfers (health care and pension expenditures) and changes in longevity to determine the level of household savings. From this model, we derived an econometric specification, augmented with the effects of public budget balances. The model is estimated for a panel of 22 OECD countries for the period 1970-2009. Our principal result is that, from the point of view of incentive to save, health transfers have a similar impact as pension replacement rates. Therefore, welfare reforms that reduce replacement rates without reforming health system may not have all the expected impact on household savings. In line with life-cycle theory, we found that longevity increases saving ratios.

Keywords: Ageing, consumption, health, longevity, pension systems, saving

JEL Classification: D91, I13, J1, J11, J26

Suggested Citation

De Freitas, Najat el Mekkaoui and Oliveira Martins, Joaquim, Health, Pension Benefits and Longevity: How They Affect Household Savings? (October 1, 2013). Netspar Discussion Paper No. 10/2013-046, Available at SSRN: https://ssrn.com/abstract=2354919 or http://dx.doi.org/10.2139/ssrn.2354919

Najat el Mekkaoui De Freitas (Contact Author)

Université Paris-Dauphine, Laboratoire d'Economie, DIAL ( email )

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Economic Research Forum (ERF) ( email )

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Joaquim Oliveira Martins

CEPII, Paris ( email )

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Paris, 75334
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+33624484652 (Phone)

HOME PAGE: http://www.cepii.fr

University Paris-Dauphine - PSL ( email )

PARIS
France

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