nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒05‒02
five papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Social Security Reforms in Colombia: Striking Demographic and Fiscal Balances By Sergio Clavijo
  2. Wage and (Un-)Employment Effects of an Ageing Workforce By Jochen Michaelis; Martin Debus
  3. For Whom the 'Retirement' Bell Tolls: Inter-temporal Comparisons Using the 1994 and 2002 Canadian General Social Survey By admin, clsrn; Gomez, Rafael; Gunderson, Morley
  4. Pension Risk, Retirement Saving and Insurance By Luigi Guiso; Tullio Jappelli; Mario Padula
  5. Older or Wealthier? The Impact of Age Adjustments on the Wealth Inequality Ranking of Countries By Ingvild Almås and Magne Mogstad

  1. By: Sergio Clavijo
    Abstract: This paper analyzes the economic rationale for adopting parametric pension reforms and reforms broadening the coverage of public health care in Colombia during 1993-2008. Parametric pension reforms have focused on increasing the retirement age and moderating replacement rates. The health system reforms aimed at reaching universal coverage by 2012, while providing a more homogenous level of services. Our results indicate that the Net Present Value of the debt of the social security system in Colombia is roughly 160 percent of GDP for pensions and about 97 percent of GDP for the health system.
    Keywords: Social security , Colombia , Fiscal reforms , Labor market policy , Pensions , Health care , Government expenditures , Social safety nets ,
    Date: 2009–03–19
  2. By: Jochen Michaelis (University of Kassel, Nora-Platiel-Str. 4, D-34127 Kassel); Martin Debus (University of Kassel, Nora-Platiel-Str. 4, D-34127 Kassel)
    Abstract: In almost all Western economies the median age of the workforce is increasing due to demographic factors. Given the empirical fact that workers of different ages are not perfect substitutes in production, this paper explores how change in the age pattern affects wages and (un)employment. We develop a general equilibrium model where wages for young and old workers are set by monopoly unions at the firm-level. Contrary to the common wisdom on this topic, we show that an increase in the relative number of older workers for a given labor force size has no effect on young and old unemployment. If, however, unions attach a higher weight to the wishes of the old, the unemployment rate of the old (young) will increase (decrease). In this case we observe a redistribution of wage income from the young to the old.
    Keywords: workforce ageing, unemployment, wage bargaining
    JEL: E2 J2 J5
    Date: 2009
  3. By: admin, clsrn; Gomez, Rafael; Gunderson, Morley
    Abstract: Data from the 2002 and 1994 General Social Survey are used to analyze the determinants of retiring due to mandatory retirement and the expected age of retirement in Canada. Changes between 1994 and 2002 are decomposed into a component attributable to shifts in the composition of respondents and the other component to changes in the preferences and constraints of respondents, the latter playing a very important role for both outcomes. Specifically, between 1994 and 2002 we find: (1) a 1.3 percentage point drop in the probability of retiring due to mandatory retirement, with that drop due to preference/constraint changes substantially reducing the probability of retiring due to mandatory retirement but being almost offset by a change in the composition of the workforce that increased the probability of retiring due to mandatory retirement; and (2) a 3.7 year increase in the expected age of retirement, with that increase being almost exclusively attributable to preference and constraint shifts. The implications of these findings for employers, employees and policy makers are
    Keywords: Retirement, Expected Retirement Age, Labour Supply, Mandatory Retirement
    JEL: J48 H30 H31 D13
    Date: 2009–04–22
  4. By: Luigi Guiso (European University Institute and CEPR); Tullio Jappelli (Università di Napoli Federico II, CSEF, and CEPR); Mario Padula (Università di Venezia, and CSEF)
    Abstract: Using a representative sample of Italian investors, we estimate the risk associated with pension benefits by eliciting for each individual the subjective distribution of the replacement rate as a summary indicator of social security wealth. We find substantial heterogeneity of pension risk and show that it is consistently related to observable features in the pension system that have different effects on individuals with different characteristics. We then relate subjective pension risk to individuals’ financial decisions. We find that people try to attenuate the adverse consequences of pension wealth uncertainty by increasing demand for targeted retirement saving and for insurance. Individuals facing more pension wealth risk tend to enroll more often in private pension funds, invest more in life insurance and buy more private health insurance. These effects are consistent with people becoming more risk-averse when pension wealth becomes less predictable, leading them to search for greater financial security.
    Keywords: Pension Risk, Retirement Saving, Insurance
    JEL: H55 E21
    Date: 2009–04–24
  5. By: Ingvild Almås and Magne Mogstad (Statistics Norway)
    Abstract: Differences in individual wealth holdings are widely viewed as a driving force of economic inequality. However, as this finding relies on cross-section data, we may confuse older with wealthier. We propose a new method to adjust for age effects in cross-sections, which eliminates transitory wealth inequality due to age, yet preserves inequality arising from other factors. This new method is superior to existing methods, like the much used Paglin-Gini, which is shown to have several problems. A new cross-country comparable database reveals that the choice of method is empirically important: Existing methods yield erroneous wealth inequality rankings of countries.
    Keywords: Wealth inequality; Life cycle; Age adjustments; Gini coefficient.
    JEL: D31 D63 D91 E21
    Date: 2009–04

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