nep-age New Economics Papers
on Economics of Ageing
Issue of 2007‒10‒27
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Effect of Retirement Incentives on Retirement Behavior: Evidence from the Self-Employed In the United States and England By Julie Zissimopoulos; Nicole Maestas; Lynn A. Karoly
  2. Labor Market Status and Transitions during the Pre-Retirement Years: Learning from International Differences By Arie Kapteyn; James P. Smith; Arthur van Soest; James Banks
  3. Inter-vivos Giving Over the Lifecycle By Michael Hurd; James P. Smith; Julie Zissimopoulos
  4. Demographic Change and the Structure of Wages: A Demand-Theoretic Analysis for Brazil By Ernesto F. L. Amaral; Daniel S. Hamermesh; Joseph E. Potter; Eduardo L.G. Rios-Neto
  5. Strategic competition in Swedish local spending on childcare, schooling and care for the elderly By Edmark, Karin
  6. Life-Expectancy Risk and Pensions: Who Bears the Burden? By Edward Whitehouse

  1. By: Julie Zissimopoulos; Nicole Maestas; Lynn A. Karoly
    Abstract: The authors examine how public and private pension and health insurance systems affect retirement transitions. In many countries, public and private pension eligibility, as well as access to health insurance varies between self-employed and wage and salary workers, and these differences are likely to cause differential retirement patterns both within and across countries. They use the variation in these institutional features within and across the United States and England to analyze retirement patterns. Based on longitudinal data from the Health and Retirement Study (HRS) in the United States and the English Longitudinal Survey of Ageing (ELSA) they find that the higher labor force exit rate of wage and salary workers compared to self-employed workers is due to defined benefit pension incentives created by the public and private pension systems. Higher rates of labor force exit at ages 55 and older in England compared to the United States are due in part to the availability of publicly provided health insurance.
    Keywords: retirement, self-employment, health insurance, pensions
    JEL: J26
    Date: 2007–10
  2. By: Arie Kapteyn; James P. Smith; Arthur van Soest; James Banks
    Abstract: Many western industrialized countries face strong budgetary pressures due to the aging of the baby boom generations and the general trends toward earlier ages of retirement. We use the American PSID and the European Community Household Panel (ECHP) to explain differences in prevalence and dynamics of self-reported work disability and labor force status. To that end we specify a two-equation dynamic panel data model describing the dynamics of labor force status and self-reported work disability. When we apply the U.S. parameters to the equations for the thirteen European countries we consider, the result is generally that work disability is lower and employment is higher. Furthermore, measures of employment protection across the different countries suggest that increased employment protection reduces reentry into the labor force and hence is a major factor explaining employment differences in the pre-retirement years.
    JEL: C81 I12 J28
    Date: 2007–10
  3. By: Michael Hurd; James P. Smith; Julie Zissimopoulos
    Abstract: Inter-vivos cash transfers and bequests between family members total hundreds of billions of dollars each year. They may equalize resources within a generation of a family as well as across family generations. Transfers delayed to the end of life may represent a significant motive for saving. The authors use longitudinal data from the Health and Retirement Study on inter-vivos transfers that span up to twelve years to: describe financial transfers made by parents to children and their correlation with donor characteristics, examine age patterns in giving behavior, the persistence of transfers, and how transfers change in response to changes in marital status, economic status and health. Their empirical analysis is motivated by a dynamic life-cycle model with intervivos transfers as an argument in the utility function which generates hypotheses about the age pattern of transfers and how mortality risk, risk aversion and economic resources affect giving behavior.
    Keywords: Intergenerational transfers, life-cycle consumption, household behavior
    JEL: D91 J14
    Date: 2007–10
  4. By: Ernesto F. L. Amaral; Daniel S. Hamermesh; Joseph E. Potter; Eduardo L.G. Rios-Neto
    Abstract: With rapidly declining fertility and increased longevity the age structure of the labor force in developing countries has changed rapidly. Changing relative supply of workers by age group, and by educational attainment, can have profound effects on labor costs. Their impacts on earnings have been heavily studied in the United States but have received little attention in Asia and Latin America, where supply shocks are at least as large and have often proceeded less evenly across the economy. We use data on 502 local Brazilian labor markets from Censuses 1970-2000 to examine the extent of substitution among demographic groups as relative supply has changed. The results suggest that age-education groups are imperfect substitutes, so that larger age-education cohorts see depressed wage rates, particularly among more-educated groups. The extent of substitution has increased over time, so that the decreasing size of the least-skilled labor force today is barely raising its remaining members' wages.
    JEL: J23 O15
    Date: 2007–10
  5. By: Edmark, Karin (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: This study tests for strategic competition in public spending on childcare and primary education, and care for the elderly, using panel data on Swedish municipalities over 1996-2005. The high degree of decentralization in the organization of the public sector implies that Swedish data is highly suitable for this type of study. The study is not limited to interactions in the same type of expenditure, but also allows for effects across expenditures. The results give no robust support for the hypothesis that municipalities react on the spending policy of neighbouring municipalities in the decision on own spending on care of the elderly, childcare and education.
    Keywords: Strategic interactions; spatial econometrics; decentralization; local public spending
    JEL: C31 H72 H77
    Date: 2007–10–08
  6. By: Edward Whitehouse
    Abstract: Two-thirds of pension reforms in OECD countries in the last 15 years contain measures that will automatically link future pensions to changes in life expectancy. This quiet revolution in pension policy means that the financial costs of longer lives will be shared between generations subject to a rule, rather than spreading the burden through potentially divisive political battles as happened in the past. As a result, nearly half of OECD countries - 13 out of 30 - now have an automatic link between pensions and life expectancy in their retirement-income systems, compared with only one country (Denmark) a decade ago. Indeed, the spread of this policy has a strong claim as the major innovation in pension policy in recent years. The link to life expectancy has been achieved in four different ways... <BR>Les deux tiers des réformes des systèmes de retraite dans les pays de l'OCDE ces 15 dernières années comportent des mesures prises pour indexer de manière automatique les futures retraites sur l'évolution de l?espérance de vie. Cette révolution qui s?opère tranquillement dans les politiques de pensions signifie que les coûts financiers engendrés par des vies plus longues seront partagés entre les générations en appliquant une règle plutôt que de répartir cette charge sous l'action de conflits politiques, tel que dans le passé. Par conséquent, près de la moitié des pays de l'OCDE - 13 sur 30 - ont maintenant des liens automatiques entre les pensions et l'espérance de vie dans leurs régimes de retraite, comparé à seulement un pays (Danemark) il y a dix ans. En effet, cette politique apparaît comme étant une des innovations plus importantes en matière de politiques de pensions ces dernières années. Le lien fait à l'espérance de vie a été réalisé de quatre manières différentes...
    JEL: D81 H55 J11 J14
    Date: 2007–10–05

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