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on Economics of Ageing |
| By: | Ludwig, Alexander (Mannheim Research Institute for the Economics of Aging (MEA) and Sonderforschungsbereich 504); Krüger, Dirk (University of Pennsylvania); Börsch-Supan, Axel (Sonderforschungsbereich 504) |
| Abstract: | Demographic change has differential impacts on the welfare of current and future generations. In a simple closed economy, aging -- a relative scarcity of young workers -- increases wages, increasing the welfare of the young. At the same time, population aging will reduce rates of return to capital, thereby reducing the welfare of asset holders who are usually older than the population average. In a global world with pension systems, however, these effects are less straightforward, since international capital flows dampen the factor price changes. Moreover, pay-as-you-go pension systems financed by payroll taxes create a wedge between net and gross wages, and their intergenerational redistribution has important additional effects on the welfare of generations. To quantify these effects, we develop a large-scale multi-country overlapping generations model with uninsurable labor productivity and mortality risk. Due to the predicted relative abundance of the factor capital, the rate of return falls between 2005 and 2050 by roughly 90 basis points. Our simulations indicate that capital flows from rapidly ageing regions to the rest of the world will initially be substantial, but that trends are reversed when households de-cumulate savings. In terms of welfare, our model suggests that young individuals with little assets and currently low labor productivity indeed gain from higher wages associated with population aging. Older, asset-rich households tend to loose because of the predicted decline in real returns to capital. |
| Date: | 2007–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:xrs:sfbmaa:07-14&r=age |
| By: | Börsch-Supan, Axel (Sonderforschungsbereich 504) |
| Abstract: | This paper is motivated by the idea to create, wherever possible, rational mechanisms that adapt pension systems automatically to a changed economic and demographic environment, rather than to leave such adaptations to discretionary high-profile pension reforms which all too often stir political opposition. The paper delineates the theory behind such rational mechanisms, shows the advantages and limits of „self-stabilizing“ pension systems, and compares the Swedish and the German approaches to rule-bound pension policy. |
| Date: | 2007–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:xrs:sfbmaa:07-25&r=age |
| By: | Börsch-Supan, Axel (Sonderforschungsbereich 504) |
| Abstract: | Disability insurance – the insurance against the loss of the ability to work – is a substantial part of social security expenditures in many countries. The enrolment rates in disability insurance vary strik-ingly across European countries and the US. This paper investigates the extent of, and the causes for, this variation, using data from SHARE, ELSA and HRS. We show that even after controlling for differences in the demographic structure and health status these differences remain. In turn, indicators of disability insurance generosity explain 75% of the cross-national variation. We conclude that country-specific disability insurance rules are a prime can-didate to explain the observed cross-country variation in disability insurance enrolment. |
| Date: | 2007–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:xrs:sfbmaa:07-23&r=age |
| By: | Bönke, Timm; Schröder, Carsten; Schulte, Katharina |
| Abstract: | We employ German Sample Survey Income data to examine income inequality and the financial situation of elderly citizens for the period from 1978 to 2003, focussing on differences between retired and non-retired elderly and between elderly with residence in the Old and the New German Laender. Inter-temporal changes in income inequality are also decomposed by income sources. To our knowledge, this is the first study that provides comparable and detailed longitudinal income statistics for the German elderly. We find some remarkable inter-temporal patterns. First, the financial situation of the elderly has improved substantially over time. This is true especially for the New Laender, although elderly with residence in the Old Laender remain financially privileged. Within the same age cohort, we also find that non-retired, on average, are financially better-off compared to retired elderly. For reunified Germany, inequality is astonishingly stable over time, but rises significantly since 1993 in the New German Laender. |
| Keywords: | Pensioner, Inequality, Inequality Decomposition, German Sample Survey Income data |
| JEL: | D31 H31 H55 J14 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cauewp:7113&r=age |