Retirement age and health expenditures

Abstract : We study the design of pension benefits and contributions when an individual's health status depends on his consumption of health services. Health services can be subsidized and their uniform public provision is also considered. We show that the second-best policy induces early retirement and that health expenditures ought to be subsidized under plausible assumptions. When only linear subsidies are available, the case for uniform public provision of health services appears to be quite strong.