nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒09‒05
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Retirement behaviour and retirement incentives in Spain By Raquel Vegas; Isabel Argimón; Marta Botella; Clara I. González
  2. The Portfolio Effect of Pension Reforms By Renata Bottazzi; Tullio Jappelli; Mario Padula
  3. 15 years of pension reform in Germany: old successes and new threats By Bonin, Holger
  4. Age and productivity: evidence from linked employer employee data By Göbel , Christian; Zwick, Thomas
  5. The age-productivity gradient: evidence from a sample of F1 drivers By Fabrizio Castellucci; Mario Padula; Giovanni Pica
  6. Aging and the Financing of Social Security in Switzerland By Christian Keuschnigg; Mirela Keuschnigg; Christian Jaag

  1. By: Raquel Vegas (FEDEA); Isabel Argimón (Banco de España); Marta Botella (Banco de España); Clara I. González (FEDEA)
    Abstract: In this paper we analyse the role that Social Security wealth and incentives play in the transition to retirement in Spain. We use the labour records and other relevant information contained in a newly released database [Muestra Continua de Vidas Laborales (2006)] to construct incentive measures stemming from the Social Security provisions in relation to retiring at old age and investigate the role played by such incentives and by other socio-economic variables on the retirement hazard. We compute the effects of the reform that took place in 2002, which made the requirements to access a pension stricter in general. We carry out a dynamic reduced-form analysis of the retirement decision using a duration model. Our results show that both the pension wealth and substitution effects have a significant role on retirement decisions, but that the latter has less relevance since the reform introduced in 2002.
    Keywords: older workers employment, retirement, public pensions
    JEL: J14 J26
    Date: 2009–07
  2. By: Renata Bottazzi; Tullio Jappelli (University of Naples “Federico II”); Mario Padula (Department of Economics, University Of Venice Cà Foscari)
    Abstract: We estimate the portfolio effect of changes in social security wealth exploiting a decade of Italian pension reforms as a source of exogenous variation. The Italian Survey of Household Income and Wealth records detailed portfolio data and elicits expectations of retirement outcomes, thus allowing us to measure the expected social security wealth and to assess to what extent Italian households perceive the innovations brought about by the reforms. We find that households have responded to the cut in pension benefits mostly by increasing real estate wealth, and that the response is stronger among households that are able to estimate more accurately future social security benefits. We also compute that for the average household consumable wealth increases by 40 percent of the reduction in social security wealth.
    Keywords: Pension Reform, Portfolio Choice, Retirement Saving
    JEL: H55 E21
    Date: 2009
  3. By: Bonin, Holger
    Abstract: The paper surveys the state of German pension system after a sequence of reforms aimed at achieving long-term sustainability. We argue that the latest reforms have moved pension provision in Germany in principle from a defined benefit to a defined contribution scheme, and that this move has stabilized pension finances to a large extent. We furthermore argue that the real economy consequences of global financial create threats to the core success factors of the reforms - cutting pension levels and raising mandatory pension age. Finally the paper discusses further possible reform measures, including the option to install a fourth pillar providing income in retirement through working after pension age.
    Keywords: Pension Financing,Financial Crisis,Fiscal Sustainability Survey,Germany
    JEL: H55 J11
    Date: 2009
  4. By: Göbel , Christian; Zwick, Thomas
    Abstract: In most Western, industrialised countries the workforce is ageing rapidly. In order to assess the possible consequences of an ageing workforce, this paper measures the impact of changes in the age structure of establishments on productivity using representative linked employer-employee panel data. We take into account that the levels as well as the changes in the age structure of establishments and their production are likely to be simultaneously determined and apply dynamic GMM methods. We find that establishment productivity increases with the share of employees until the age of 50-55 and only decreases slightly afterwards. Our findings suggest that previous estimations are biased because they either do not take into account endogeneity, time dependencies, or crucial information correlated with age shares and productivity. Large standard deviations point to important variation in the age productivity profile among establishments.
    Keywords: ageing workforce,age,productivity,LEED,system GMM
    JEL: J11 J14 J21
    Date: 2009
  5. By: Fabrizio Castellucci (Bocconi University); Mario Padula (Department of Economics, University Of Venice Cà Foscari); Giovanni Pica (Department of Economics, University of Salerno)
    Abstract: Estimating the effect of aging on productivity is a daunting task. First, it requires clean measures of productivity. Second, unobserved heterogeneity at workers, firms and workers/firms level challenges the identification of the age-productivity gradient in cross-sectional data. Finally, the study of the age-productivity link requires to partial out the role of experience and to account for the selection bias that arises if less able people drop out faster than more able ones. We tackle these issues by focussing on a panel of Gran Prix Formula One drivers and show that the age-productivity link has an inverted U-shape profile, with a peak at around the age of 30-32.
    Keywords: Aging, individual effects, firm effects, match effects, Formula One
    JEL: J24 C23 L83
    Date: 2009
  6. By: Christian Keuschnigg; Mirela Keuschnigg; Christian Jaag
    Abstract: This paper studies the quantitative impact of aging on the financing of social security and the public sector in Switzerland. Demographic projections forecast a doubling of the dependency ratio until 2050 as well as an increase of 10% in total population due to longer life expectancy. We use a computational growth model with overlapping generations, including labor market adjustment on five different behavioural margins: labor market participation, hours worked, job search, retirement, and on-the-job training. Starting with a passive fiscal strategy, our simulations show that a doubling of the old age dependency ratio might reduce per capita income by more than 20 percent and necessitate a long-run increase of wage taxes and social security contributions by 21 percentage points. A comprehensive reform package, including an increase in the effective retirement age to 68 years and several other measures, may limit the increase of the tax burden to 4 percentage points of the value added tax and reduce the decline of per capita income to 6% in the long-run. firms typically have a high growth potential, need external funds to finance investment, and rely on the key effort and know-how of inside entrepreneurs. Given the limited amount of tangible assets and the non-contractible nature of entrepreneurial effort, these firms are often financially constrained. Access to external funds becomes an important factor in the expansion of innovative industries. This paper models a two sector economy of innovative and standard industries and shows how the pattern of comparative advantage is shaped by factor endowments and variables relating to corporate finance. In particular, a larger equity ratio of young entrepreneurial firms and tough corporate governance standards relax the financing constraints and create a comparative advantage in innovative industries.
    Keywords: Aging, social security, retirement, human capital, unemployment
    JEL: D58 D91 H55 J26 J64
    Date: 2009–09

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