Demographic Change, Social Security Systems, and Savings
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In theory, improvements in healthy life expectancy should generate increases in the average age of retirement, with little effect on savings rates. In many countries, however, retirement incentives in social security programs prevent retirement ages from keeping pace with changes in life expectancy, leading to an increased need for life-cycle savings. Analyzing a cross-country panel of macroeconomic data, we find that increased longevity raises aggregate savings rates in countries with universal pension coverage and retirement incentives, though the effect disappears in countries with pay-as-you-go systems and high replacement rates.
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savings; demographic change; population economics; social security systems
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Required Publisher Statement: © Elsevier. Final version published as: Bloom, D. E., Canning, D., Mansfield, R. & Moore, M. (2007). Demographic change, social security systems, and savings. Journal of Monetary Economics, 54(1), 92-114. Reproduced with permission. All rights reserved.