Gender Wage and Longevity Gaps and the Design of Retirement Systems

50 Pages Posted: 6 Jun 2022

See all articles by Francesca Barigozzi

Francesca Barigozzi

University of Bologna - Department of Economics

Helmuth Cremer

University of Toulouse (GREMAQ & IDEI); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Jean-Marie Lozachmeur

University of Toulouse 1 - Toulouse School of Economics (TSE)

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Abstract

We study the design of pension benefits for male and female workers. Women live longer than men but have a lower wage. Individuals can be single or live in couples who pool their incomes. Social welfare is utilitarian but an increasing concave transformation of individuals' lifetime utilities introduces the concern for redistribution between individuals with different life-spans.We derive the optimal direction of redistribution and show how it is affected by a gender neutrality rule. With singles only, a simple utilitarian solution implies redistribution from males to females. When the transformation is sufficiently concave redistribution may or may not be reversed. With couples only, the ranking of gender retirement ages is always reversed when the transformation is sufficiently concave.Under gender neutrality pension schemes must be self-selecting. Gender neutrality implies distortions of retirement decisions, limits redistribution and, negatively affects the group towards which redistribution is targeted. With couples, a first best that implies a lower retirement age for females can be implemented by a gender-neutral system. Otherwise, gender neutrality implies equal retirement ages and restricts the possibility to compensate the shorter-lived individuals. Calibrated simulations show that when singles and couples coexist, gender neutrality substantially limits redistribution in favor of single women and fully prevents redistribution in favor of male spouses.

Keywords: gender wage gap, gender gap in longevity, retirement systems

Suggested Citation

Barigozzi, Francesca and Cremer, Helmuth and Lozachmeur, Jean-Marie, Gender Wage and Longevity Gaps and the Design of Retirement Systems. Available at SSRN: https://ssrn.com/abstract=4129099 or http://dx.doi.org/10.2139/ssrn.4129099

Francesca Barigozzi

University of Bologna - Department of Economics ( email )

P.zza Scaravilli 2
40126 Bologna, 40126
Italy

Helmuth Cremer (Contact Author)

University of Toulouse (GREMAQ & IDEI) ( email )

Toulouse, 31000
France
+33 1 6112 8606 (Phone)
+33 1 6112 8637 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Jean-Marie Lozachmeur

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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