|
on Economics of Ageing |
| By: | Montizaan, Raymond (ROA, Maastricht University); Cörvers, Frank (ROA, Maastricht University); de Grip, Andries (ROA, Maastricht University) |
| Abstract: | This paper uses a natural experiment approach to identify the effects of an exogenous change in future pension benefits on workers' training participation. We use unique matched survey and administrative data for male employees in the Dutch public sector who were born in 1949 or 1950. Only the latter were subject to a major pension reform that diminished their pension rights. We find that this exogenous shock to pension rights postpones expected retirement and increases participation in training courses among older employees, although exclusively for those employed in large organizations. |
| Keywords: | natural experiment, retirement, training |
| JEL: | J14 J24 J26 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4462&r=age |
| By: | Jingjing Chai (Goethe University); Wolfram Horneff (Goethe University); Raimond Maurer (Goethe University); Olivia S. Mitchell (The Wharton School) |
| Abstract: | This paper derives optimal life cycle portfolio asset allocations as well as annuity purchases trajectories for a consumer who can select her hours of work and also her retirement age. Using a realistically-calibrated model with stochastic mortality and uncertain labor income, we extend the investment universe to include not only stocks and bonds, but also survival-contingent payout annuities. We show that making labor supply endogenous raises older peoples’ equity share; substantially increases work effort by the young; and markedly enhances lifetime welfare. Also, introducing annuities leads to earlier retirement and higher participation by the elderly in financial markets. Finally, when we allow for an age-dependent leisure preference parameter, this fits well with observed evidence in that it generates lower work hours and smaller equity holdings at older ages as well as sensible retirement age patterns. |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp204&r=age |
| By: | Alejandra Cox Edwards (California State University-Long Beach); Estelle James (Hudson Institute) |
| Abstract: | Recent research has argued that incentives stemming from social security systems influence the worker’s decision to retire. The experience of Chile, which radically changed its system in 1981, offers an opportunity to test this hypothesis. The new system tightened access to early pensions, replaced an actuarially unfair defined benefit plan with an actuarially fair defined contribution plan, exempted pensioners from the pension payroll tax and allowed widows to keep their own pension in addition to their survivor’s benefit. Although the old system is being phased out, since 1981 the two systems have co-existed. Using probit analysis of the behavior of a retrospective sample of new and old system affiliates, we estimate the impact of the new social security rules on the probability of dropping out of the labor force, for older workers. We find large effects. Age of pensioning has been postponed. Labor force participation is much higher among affiliates of the new system compared with the old, especially for pensioners and women. This is not simply due to selection: Aggregate participation rates have increased as the new system’s share of total affiliates has risen. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp202&r=age |
| By: | Richard Rogerson (Arizona State University); Johanna Wallenius (Arizona State University) |
| Abstract: | We analyze the forces that can generate retirement in different versions of standard life cycle models of labor supply. While nonconvexities in production can generate retirement, we show that the size of nonconvexities needed increases sharply as the intertemporal elasticity of substitution for labor decreases. In a model with home production, we show that these models imply a large increase in time devoted to home production at retirement. This is contrary to what is found in the ATUS data. We suggest that nonconvexities in the enjoyment of leisure time may be a promising alternative feature to generate retirement. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp205&r=age |
| By: | Juergen Jung (Department of Economics, Towson University); Chung Tran (Department of Economics, University of New South Wales) |
| Abstract: | In this paper we argue that the strategic interaction between the labor supply decision of the elderly and private transfers from their children lowers the opportunity cost of leisure of the elderly. This in turn magnifies the crowding-out effect of public pensions on the labor supply of the elderly. We show that this mechanism has implications for evaluating the crowding-out effect of public pensions in developing countries. That is, a misspecified econometric model that does not control for the endogeneity of private transfers leads to a biased estimate of the crowding-out effect of public pensions. Using data from a household survey in Vietnam we find that the effect of public pensions on the probability of retirement is 2.5 times larger when explicitly accounting for the interaction between private transfers and the labor supply decision of elderly individuals. |
| Keywords: | Altruism, crowding-out, social security, retirement, transfers. |
| JEL: | H31 H55 I38 J14 J22 J28 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2009-01&r=age |
| By: | Frank T. Denton; Byron G. Spencer |
| Abstract: | Since the prevalence of many chronic health conditions increases with age we might anticipate that as the population ages the proportion with one or more such conditions would rise, as would the cost of treatment. We ask three questions: How much would the overall prevalence of chronic conditions increase in a quarter century if age-specific rates of prevalence did not change? How much would the requirements for health care resources increase in those circumstances? How much difference would it make to those requirements if people had fewer chronic conditions? We conclude that the overall prevalence rates for almost all conditions associated mostly with old age would rise by more than 25 percent and that health care requirements would grow more rapidly than the population – more than twice as rapidly in the case of hospital stays – if the rates for each age group remained constant. We conclude also that even modest reductions in the average number of conditions at each age could result in substantial savings. |
| Keywords: | Chronic conditions, aging population, health care resources |
| JEL: | I10 J14 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:qseprr:435&r=age |
| By: | Firman Witoelar; John Strauss |
| Abstract: | Indonesia has been undergoing a major health and nutrition transition over the past twenty or more years and there has begun a significant aging of the population as well. In this paper the authors focus on documenting major changes in the health of the population aged 45 years and older, since 1993. They use the Indonesia Family Life Survey (IFLS), a large-scale, broad-based panel survey of households and individuals, covering 4 full waves from 1993 to 2007/8. Much of the changes can be seen as improvements in health, such as the movement out of undernutrition and communicable disease as well as the increasing levels of hemoglobin. On the other hand, other changes such as the increase in overweight and waist circumference, especially among women, and continuing high levels of hypertension that seems to be inadequately addressed by the health system, indicate that the elderly population in Indonesia is increasingly exposed to higher risk factors that are correlated with chronic problems such as cardiovascular diseases and diabetes. In addition to documenting long-run changes in health and its distribution among the elderly Indonesian population, they examine correlations between socio-economic status, principally education and percapita expenditure, and numerous health outcome and behavioral variables. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:704&r=age |