Work

Working less for longer: unintended effects of longevity adjustment of retirement age

Year: 2024

Type: article

Abstract: This paper utilises a model with overlapping generations ad modum Blanchard-Yaari and shows that by broadening the labour supply on the extensive margin through longevity adjustment of the statutory retirement age, labour supply is likely to decrease on the intensive margin. This backlash effect depends strongly on the specific design of the pension system: It is significantly higher under a pay-as-you-go scheme with fixed benefits compared to a pay-as-you-go scheme with fixed contributions and a fully funded scheme based on voluntary savings. The findings have implications for how to address the fiscal and macroeconomic challenges raised by an ageing population. JEL codes: E21, J21, J26, H55

Source: International Tax and Public Finance

DOI: 10.1007/s10797-024-09862-9

Authors: Svend E. Hougaard Jensen, Thorsteinn Sigurdur Sveinsson, Miguel Sousa Duarte

Institutions: Copenhagen Business School, Seðlabanki Íslands

Language: English

Topic: Retirement, Disability, and Employment

Subfield: Demography

Field: Social Sciences

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $2,990