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Longevity and Life‐cycle Savings *
Author(s) -
Bloom David E.,
Canning David,
Graham Bryan
Publication year - 2003
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.t01-1-00001
Subject(s) - longevity , life expectancy , economics , disequilibrium , population ageing , overlapping generations model , offset (computer science) , demographic economics , econometrics , population , labour economics , demography , gerontology , medicine , sociology , computer science , ophthalmology , programming language
We add health and longevity to a standard model of life‐cycle saving and show that, under plausible assumptions, increases in life expectancy lead to higher savings rates at every age, even when retirement is endogenous. In a stationary population these higher savings rates are offset by increased old age dependency, but during the disequilibrium phase, when longevity is rising, the effect on aggregate savings rates can be substantial. We find empirical support for this effect using a cross‐country panel of national savings rates.