Population Aging and Legal Retirement Age∗

This paper analyzes the effects of population aging on the preferred legal retirement age. What is revealed is the crucial role that the indirect ’macro’ effects resulting from a change in the legal retirement age play in the optimal decision. Two Social Security systems are studied. Under a defined contribution scheme aging lowers the preferred ∗All correspondence to Francisco Lagos. The authors thank Ignacio Ortuño, Slomo Weber, Francisco Marhuenda, Georges Casamatta, and two anonymous referees for comments on a previous version of this paper. †University of Granada. Faculty of Economics, Campus La Cartuja s/n, Granada, 18011, Spain (Fax: 0034-958249995: e-mail: [email protected]) ‡University of Granada. Faculty of Economics, Campus La Cartuja s/n, Granada, 18011, Spain (Fax: 0034-958249995: e-mail: [email protected])