nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒01‒17
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Ageing and the payout phase of pensions, annuities and financial markets By Pablo Antolin
  2. Life Expectancy and Old Age Savings By Mariacristina De Nardi; Eric French; John Bailey Jones
  3. Regional Labor Markets and Aging in Germany By Carsten Ochsen
  4. Are young and old workers harmful for firm productivity? By Thierry Lallemand; François Rycx
  5. This Job is 'Getting Old:' Measuring Changes in Job Opportunities Using Occupational Age Structure By David Autor; David Dorn
  6. Fiscal sustainability and policy implications for the euro area By Fabrizio Balassone; Jorge Cunha; Geert Langenus; Bernhard Manzke; Jeanne Pavot; Doris Prammer; Pietro Tommasino
  7. Population Ageing: Crisis or Opportunity? By Ermisch J

  1. By: Pablo Antolin
    Abstract: This paper reviews the impact of ageing on private pensions, in particular on the payout phase, assesses the part that annuities can play in financing retirement, and examines the role of financial markets in facilitating the allocation on assets accumulated in defined contribution pension plans. A comprehensive set of recommendations for discussion is provided at the end of the paper.<P>Le vieillissement de la population et la phase de versement des pensions, rentes viagères et marchés financiers<BR>Ce document examine l’impact du vieillissement de la population sur les pensions privées, spécialement sur la phase de versement des pensions, évalue le rôle que les rentes viagères peuvent jouer pour financier la retraite, et examine le rôle de les marchés financiers pour faciliter l’allocation des actifs accumulés dans les plans de retraite à cotisations définies. Un ensemble de recommandations pour discussion est fourni à la fin du document.
    Keywords: plans de pension à cotisations définies, rente viagère, risque de longévité, Annuities, annuity markets, defined contribution plans , longevity risk, longevity-indexed bonds, marches des rentes viagères, annuity providers, deferred life annuities, insurance companies, lump-sums, programmed withdrawal, retirement income, compagnie d’assurances, retrait programmé, revenu des retraites, versement unique, long-term bonds, bons à long terme, indice de longévité, rentes viagères différées
    JEL: D11 D14 D91 E21 G11 G38 J14 J26
    Date: 2008–12
  2. By: Mariacristina De Nardi; Eric French; John Bailey Jones
    Abstract: Rich people, women, and healthy people live longer. We document that this heterogeneity in life expectancy is large, and we use an estimated structural model to assess its effect on the elderly's saving. We find that the differences in life expectancy related to observable factors such as income, gender, and health have large effects on savings, and that these factors contribute by similar amounts. We also show that the risk of outliving one's expected lifespan has a large effect on the elderly's saving behavior.
    JEL: D1 D31 D91 E2 E21 E6 H31 I1
    Date: 2009–01
  3. By: Carsten Ochsen (University of Rostock)
    Abstract: This paper analyzes how the aging labor force a¤ects the unem- ployment rate at the regional level in Germany. A theoretical model of equilibrium unemployment with spatial labor market interactions is used to study the e¤ects of age-related changes in job creation and job destruction. Using data for 343 districts, we then examine empirically the consequences of an aging labor force for the local labor markets in Germany. We apply di¤erent estimation techniques to a spatial and time dynamic panel data model. According to the estimates, aging causes an increase in job destruction. In addition, aging in the local labor market increases job creation, while the spatial aging e¤ect on job creation in the local district is negative.
    Keywords: Regional Unemployment, Vacancies and Separations, Job Creation, Regional Mobility, Spatial Interactions and Matching, Aging of the Labor Force
    JEL: J64 J63 J23 J61 R12 J10
    Date: 2009
  4. By: Thierry Lallemand (Université Libre de Bruxelles, SBS-EM, DULBEA); François Rycx (Université Libre de Bruxelles, SBS-EM, CEB, DULBEA and IZA)
    Abstract: This paper investigates the effects of the workforce age structure on the productivity of large Belgian firms. More precisely, it examines different scenarios of changes in the proportion of young (16-29 years), middle-aged (30-49 years) and old (more than 49 years) workers and their expected effects on firm productivity. Using detailed matched employer-employee data, we find that a higher share of young (old) workers within firms is favourable (harmful) for firm value added per capita. Results also show that age structure effects on productivity are stronger in ICT than in non-ICT firms.
    Keywords: Firm performance, Workforce age structure, Demographic changes
    JEL: J21 J31 L25
    Date: 2008–03
  5. By: David Autor; David Dorn
    Abstract: High- and low-wage occupations are expanding rapidly relative to middle-wage occupations in both the U.S. and the E.U. We study the reallocation of workers from middle-skill occupations towards the tails of the occupational skill distribution by analyzing changes in age structure within and across occupations. Because occupations typically expand by hiring young workers and contract by curtailing such hiring, we posit that growing occupations will get younger while shrinking occupations will 'get old.' After verifying this proposition, we apply this observation to local labor markets in the U.S. to test whether markets that were specialized in middle-skilled occupations in 1980 saw a differential movement of both older and younger workers into occupations at the tails of the skill distribution over the subsequent 25 years. Consistent with aggregate trends, employment in initially middle-skill-intensive labor markets hollowed-out between 1980 and 2005. Employment losses among non-college workers in the middle of the occupational skill distribution were almost entirely countered by employment growth in lower-tail occupations. For college workers, employment losses at the middle were offset in roughly equal measures by gains in the upper- and lower-tails of the occupational skill distribution. But gains at the upper-tail were almost entirely limited to young college workers. Consequently, older college workers are increasingly found in lower-skill, lower-paying occupations.
    JEL: E24 J11 J21 J24
    Date: 2009–01
  6. By: Fabrizio Balassone (Banca d’Italia, Via Nazionale 91, I-00184 Rome, Italy.); Jorge Cunha (Banco de Portugal, 148, Rua do Comercio, P-1101 Lisbon Codex, Portugal.); Geert Langenus (Corresponding author: National Bank of Belgium, Boulevard de Berlaimont 14, B-1000 Brussels, Belgium.); Bernhard Manzke (Deutsche Bundesbank, Wilhelm-Epstein-Strasse 14, D-60431 Frankfurt am Main, Germany.); Jeanne Pavot (Banque de France, 39, rue Croix-des-Petits-Champs, F-75049 Paris Cedex 01, France.); Doris Prammer (Oesterreichische Nationalbank, Otto Wagner Platz 3 / Postfach 61, A-1011 Vienna, Austria and European Commission.); Pietro Tommasino (Banca d’Italia, Via Nazionale 91, I-00184 Rome, Italy.)
    Abstract: In this paper we examine the sustainability of euro area public finances against the backdrop of population ageing. We critically assess the widely used projections of the Working Group on Ageing Populations (AWG) of the EU's Economic Policy Committee and argue that ageing costs may be higher than projected in the AWG reference scenario. Taking into account adjusted headline estimates for ageing costs, largely based upon the sensitivity analysis carried out by the AWG, we consider alternative indicators to quantify sustainability gaps for euro area countries. With respect to the policy implications, we assess the appropriateness of different budgetary strategies to restore fiscal sustainability taking into account intergenerational equity. Our stylised analysis based upon the lifetime contribution to the government's primary balance of different generations suggests that an important degree of pre-funding of the ageing costs is necessary to avoid shifting the burden of adjustment in a disproportionate way to future generations. For many euro area countries this implies that the medium-term targets defined in the context of the revised stability and growth pact would ideally need to be revised upwards to significant surpluses. JEL Classification: H55, H60.
    Keywords: Population ageing, fiscal sustainability, generational accounting, mediumterm objectives for fiscal policy.
    Date: 2009–01
  7. By: Ermisch J (Institute for Social and Economic Research)
    Abstract: Population ageing reduces the working population relative to the number of pensions by one-third over next 30 years. The challenge presented by this development is how best to support pensionersÂ’ incomes without suppressing the net incomes of the working population and capital accumulation too much. The ability of private savings and occupational pensions to meet this challenge is doubtful. There is a related issue of inter-generational equity: how do we share the burden of population ageing between generations, rather than passing it on to future generations. Given the uncertainty about future demographic and economic developments, it is important to have adaptable or self-correcting policies to address population ageing.
    Date: 2008–11–18

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