Working paper

Gender wage and longevity gaps and the design of retirement systems

Francesca Barigozzi, Helmuth Cremer, and Jean-Marie Lozachmeur

Abstract

We study the design of pension benets for male and female workers. Women live longer than men but have a lower wage. Individuals can be single or live in couples who pool their incomes. Social welfare is utilitarian but an increasing concave transforma- tion of individualslifetime utilities introduces the concern for redistribution between individuals with di¤erent life-spans. We derive the optimal direction of redistribution and show how it is a¤ected by a gender neutrality rule. With singles only, a simple utilitarian solution implies re- distribution from males to females. When the transformation is su¢ ciently concave redistribution may or may not be reversed. With couples only, the ranking of gender retirement ages is always reversed when the transformation is su¢ ciently concave. Under gender neutrality pension schemes must be self-selecting. With singles only this implies distortions of retirement decision and restricts redistribution across genders. With couples, a rst best that implies a lower retirement age for females can be im- plemented by a gender-neutral system. Otherwise, gender neutrality implies equal re- tirement ages and restricts the possibility to compensate the shorter-lived individuals. Calibrated simulations show that when singles and couples coexist, gender neutrality substantially limits redistribution in favor of single women and fully prevents redistri- bution in favor of male spouses.

Keywords

Gender wage gap; gender gap in longevity; retirement systems;

JEL codes

  • H55: Social Security and Public Pensions
  • H31: Household
  • H21: Efficiency • Optimal Taxation

Reference

Francesca Barigozzi, Helmuth Cremer, and Jean-Marie Lozachmeur, Gender wage and longevity gaps and the design of retirement systems, TSE Working Paper, n. 21-1217, April 2021.

See also

Published in

TSE Working Paper, n. 21-1217, April 2021