Year: 2015
Type: preprint
Abstract: Better health not only boosts longevity in itself, it also postpones the initial onset of disability and chronic infirmity to a later age. In this paper we examine the potential effects of such 'compression of morbidity' on pensions, and introduce a health-dependent dimension to the standard pay-as-you-go (PAYG) pension scheme. Studying the long-term implications of such a system in a simple overlapping generations framework, we find that an increase in public health investment can augment capital accumulation in the long run. Because of this, the combination of health investment with a partially health-dependent PAYG scheme may in fact outperform a purely PAYG system in terms of lifetime welfare.
Authors: Melindi-Ghidi, Paolo, Sas, Willem
Institutions: Aix-Marseille Sciences Economiques, KU Leuven
Language: English
Topic: Global Health Care Issues
Subfield: General Health Professions
Field: Health Professions
Domain: Health Sciences
Open Access status: green
OpenAlex ID: W2207065811