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Title: Longevity, Social Security and Endogenous Retirement: Theory and Policy Implications
Authors: ZENG TING
Keywords: Social Security, Life longevity, Retirement
Issue Date: 27-Jul-2011
Citation: ZENG TING (2011-07-27). Longevity, Social Security and Endogenous Retirement: Theory and Policy Implications. ScholarBank@NUS Repository.
Abstract: Many existing studies predict that raising life longevity tends to increase retirement age. However, empirical observations of cross-country effective retirement age show the reverse trend. This inconsistency is believed to be caused by the existence of social security pension system. This paper employs a two-period overlapping generations (OLG) model to study the impact of an unfunded social security on retirement decision by incorporating uncertainty in life longevity. Analytical results confirm that retirement is negatively related to life longevity but positively to social security generosity. Numerical results from calibration illustrate the effect on retirement age, welfare and steady-state capital levels for various life longevity and payroll tax (pension benefit) levels. In addition to the baseline model, the paper also compares the retirement incentives induced by different social security contribution and benefit schemes, and thus draws implications for policy making on social security reform.
Appears in Collections:Master's Theses (Open)

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