Fair retirement under risky lifetime
Journal article: A premature death unexpectedly brings a life and a career to their end, leading to substantial welfare losses. We study the retirement decision in an economy with risky lifetime and compare the laissez-faire with egalitarian social optima. We consider two social objectives: (1) the maximin on expected lifetime welfare, allowing for a compensation for unequal life expectancies, and (2) the maximin on realized lifetime welfare, allowing for a compensation for unequal lifetimes. The latter optimum involves, in general, decreasing lifetime consumption profiles as well as raising the retirement age. This result is robust to the introduction of unequal life expectancies and unequal productivities.
Author(s)
Marc Fleurbaey, Marie-Louise Leroux, Pierre Pestieau, Grégory Ponthière
Journal
- International Economic Review
Date of publication
- 2016
Keywords
- Fair retirement
Pages
- 177-210
URL of the HAL notice
Version
- 1
Volume
- 57