Munich Personal RePEc Archive  Longevity, life-cycle behavior
and pension reform  Haan, Peter and Prowse, Victoria (2012):
Longevity, life-cycle behavior and pension reform.   Download
(359Kb) | Preview   How can public pension systems be reformed
to ensure fiscal stability in the face of increasing life
expectancy? To address this pressing open question in public
finance, we use micro data to estimate a structural life-cycle
model of individuals' employment, retirement and consumption
decisions. Our modeling approach allows life expectancy and the
nature of the public pension system to influence the decisions
of forward-looking individuals planning for retirement. We
calculate that, in the case of Germany, an increase of 4.34
years in the full pensionable age or a cut of 37.7% in the per-
year value of public pension benefits would offset the fiscal
consequences of the 6.4 year increase in age 65 life expectancy
anticipated to occur over the next 40 years. Of these two
approaches to coping with the fiscal imp