On the Heterogeneity in Longevity among Socioeconomic Groups: Scope, Trends, and Implications for Earnings-Related Pension Schemes

1
Robert Holzmann
Robert Holzmann
2
Mercedes Ayuso
Mercedes Ayuso
3
Jorge Miguel Bravo
Jorge Miguel Bravo
1 Austrian Academy of Sciences

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Heterogeneity in longevity between socioeconomic groups is increasingly documented for developed economies and is reviewed in the paper. Heterogeneity in life expectancy disaggregated by main socioeconomic characteristics -such as age, gender, race, health, education, profession, income, and wealth -is sizable and has not declined in recent decades. The prospects for future decline are not strong, either; perhaps even to the contrary. As heterogeneity is closely linked to income or earnings (i.e., the contribution base of earnings-related retirement income programs such as social security benefits and private sector life annuities) and as heterogeneity is empirically sizable, the result is major implicit taxes for some groups -particularly the less educated and low earners -and major subsidies for other groupsparticularly highly educated individuals and high-income earners. The implications for retirement income reform and scheme design are substantial as taxes/subsidies counteract the envisaged effects of (i) a closer contribution-benefit link, (ii) a later formal retirement age to address population aging, and (iii) more individual funding and private annuities to compensate for reduced public generosity.

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No external funding was declared for this work.

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The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Robert Holzmann. 2017. \u201cOn the Heterogeneity in Longevity among Socioeconomic Groups: Scope, Trends, and Implications for Earnings-Related Pension Schemes\u201d. Global Journal of Human-Social Science - E: Economics GJHSS-E Volume 17 (GJHSS Volume 17 Issue E1): .

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GJHSS Volume 17 Issue E1
Pg. 31- 57
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Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

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GJHSS-E Classification: JEL: D9, G22, H55, J13, J14, J16
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v1.2

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April 6, 2017

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English

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Heterogeneity in longevity between socioeconomic groups is increasingly documented for developed economies and is reviewed in the paper. Heterogeneity in life expectancy disaggregated by main socioeconomic characteristics -such as age, gender, race, health, education, profession, income, and wealth -is sizable and has not declined in recent decades. The prospects for future decline are not strong, either; perhaps even to the contrary. As heterogeneity is closely linked to income or earnings (i.e., the contribution base of earnings-related retirement income programs such as social security benefits and private sector life annuities) and as heterogeneity is empirically sizable, the result is major implicit taxes for some groups -particularly the less educated and low earners -and major subsidies for other groupsparticularly highly educated individuals and high-income earners. The implications for retirement income reform and scheme design are substantial as taxes/subsidies counteract the envisaged effects of (i) a closer contribution-benefit link, (ii) a later formal retirement age to address population aging, and (iii) more individual funding and private annuities to compensate for reduced public generosity.

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On the Heterogeneity in Longevity among Socioeconomic Groups: Scope, Trends, and Implications for Earnings-Related Pension Schemes

Mercedes Ayuso
Mercedes Ayuso
Jorge Miguel Bravo
Jorge Miguel Bravo
Robert Holzmann
Robert Holzmann Austrian Academy of Sciences

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