Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
9548680 | Economic Modelling | 2004 | 28 Pages |
Abstract
In this paper I address the links between life expectancy, retirement age and economic growth. I build a finite horizon OLG model with exogenous retirement in which human capital accumulation drives endogenous growth. The return on individual investment in human capital depends positively on the remaining active years. Postponing retirement age raises the return and investment in human capital, and the proportion of working individuals, thus increasing the sustainable growth rate. Increments in life expectancy do not increase the growth rate by themselves, but reduce it: optimal investment in human capital is not affected and the proportion of retirees becomes larger. Therefore, increases in life expectancy lead to higher growth rates only if they are accompanied by simultaneous increments in the working period.
Related Topics
Social Sciences and Humanities
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Economics and Econometrics
Authors
Cruz A. EchevarrıÌa,