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

Replaced by

Francesca Barigozzi, Helmuth Cremer, and Jean-Marie Lozachmeur, Gender wage and longevity gaps and the design of retirement systems, Journal of Economic Behavior and Organization, vol. 209, 2023, pp. 263–287.

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, revised February 2023.

See also

Published in

TSE Working Paper, n. 21-1217, April 2021, revised February 2023