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on Economics of Ageing |
| By: | Alonso Ortiz, Jorge |
| Abstract: | There are large differences in the employment to population ratio relative to the US across OECD countries, and these differences are even larger for the old age (55-69 years). There are also large differences in various features of social security, such as the replacement rate, the entitlement age or whether it is allowed to collect social security while working. These observations suggest that they might be an important contributing factor in accounting for differences in retirement. I assess quantitatively the importance of these features using a life cycle general equilibrium model of retirement. I find that the differences in social security account for 90% of the differences in employment to population ratio at ages 60-64 in the OECD. The differences in the replacement rates and whether the system allows for collecting social security while working are the most important contributing factors to account for the differences in retirement. |
| Keywords: | Social security; retirement; idiosyncratic labor income risk |
| JEL: | J14 E24 H20 J26 |
| Date: | 2009–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18752&r=age |
| By: | Bottazzi, Renata; Jappelli, Tullio; Padula, Mario |
| 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: | E21 H55 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7380&r=age |
| By: | Frank T. Denton; Ross Finnie; Byron G. Spencer |
| Abstract: | We analyse a large longitudinal data file to determine who has retired and to assess how successful they are in maintaining their incomes after retirement. Our main conclusions are as follows. First, in the two years immediately after retirement the after-tax income replacement ratios average about two-thirds when calculated across all ages of retirement. Second, the ratios tend to increase with the age of retirement. Third, the ratios increase with years in retirement, at least in the first few years. Finally, income replacement ratios are highest in the lowest income quartile and generally decline as income increases; within each quartile the replacement ratios are higher for those who retired later than for those retired earlier. |
| Keywords: | income replacement, retirement |
| JEL: | J26 D31 J14 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:qseprr:436&r=age |
| By: | Thierry Debrand (IRDES institut for research and information in health economics); Nicolas Sirven |
| Abstract: | The aim of this research is to identify the determinants of pathways to retirement in Europe and, by measuring the influence or combined influence of individual, contextual and institutional domains on labor force participation, to better understand inter-country variations in the employment rates of older citizens. The dataset consists of both the first two longitudinal waves of SHARE (2004-2006) and some macroeconomic series from the OECD describing three complementary social protection systems (pensions, disability, employment). The analysis is simultaneously carried out in terms of "stocks" (labor force participation in 2004) and "flows" (pathways from employment in 2004 to retirement in 2006). Indicators are developed to measure the contribution of each domain (individual, contextual, institutional), and their various combinations to the employment rate of older citizens, and their role in explaining inter-country differences. As expected, results demonstrate that labor force participation and the decision to retire are determined by the various individual and contextual domains with social protection systems, each playing a significant role. Institutional determinants explain most of the inter-country differences. There appears to be a complementary effect between the different categories of social protection, and the global effect of the three systems combined is greater than the sum of the idiosyncratic effect of each system. Future public policies aiming at increasing the workforce participation of older citizens should therefore take into account that retirement decisions are determined by complex, interactive and individual determinants, and that within the European Union, the main convergence factors are to be found in the differences in social protection systems. |
| Keywords: | Social Protection, Social Security, Retirement, Ageing, Health, Europe |
| JEL: | I10 I18 J21 J28 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:irh:wpaper:dt28&r=age |
| By: | Saint-Paul, Gilles |
| Abstract: | This paper discusses the specificities of the labor market for older workers. It discusses the implications of those specificities for the effect of labor market institutions on the employability of those workers. It shows that while unemployment benefits indexed backwards and hiring costs are likely to harm these workers more than the average worker, the converse is true for employment protection, provided it is uniform across workers and not specifically higher for older workers. It provides some evidence on the impact of labor market institutions on older workers by comparing their outcome in the United States and France. It discusses how the welfare state can be reformed in order to improve outcomes for older workers. |
| Keywords: | employment; employment protection; labor market institutions; older workers; pensions; retirement; welfare state |
| JEL: | J23 J24 J26 J31 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7490&r=age |
| By: | Gaigné, Carl; Thisse, Jacques-François |
| Abstract: | We investigate whether an aging population may challenge the supremacy of large working-cities. To this end, we develop an economic geography model with two types of individuals (workers and retirees) and two sectors (local services and manufacturing). Workers produce and consume; the elderly consume only. As a result, the mobility decision of workers is driven by both the wage gap and the cost-of-living gap, unlike the elderly who react to the differences in the cost of living only. We show that the return of pre-industrial urban system dominated by rentier cities does not seem to be on the agenda. Quite the opposite, the future of large working-cities is still bright, the reason being that today’s urban costs act as a strong force that prevents a large share of local services and manufacturing firms from following the rentiers in the elderly-cities, while the supply of differentiated b2c services prevent their complete separation. |
| Keywords: | aging population; commuting costs; economic geography; sectoral mobility; spatial mobility |
| JEL: | F12 F16 J60 L13 R12 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7403&r=age |
| By: | Justina A.V. Fischer |
| Abstract: | Previous happiness research has explicitly assumed that subjective well-being is U-shaped in age. This paper sheds new light on this issue testing several functional forms. Using micro data from the World Values Survey on 44 000 persons in 30 economically advanced OECD countries with long life expectancies, we reveal a hyperbolic functional form. We find that life satisfaction reaches another local maximum around the age of 83, with a level identical to that of a 26-year old. This hyperbolic well-beingage relation is robust to the inclusion of cohort effects. We test this relationship for each OECD country separately, and corroborate the functional form using a sample of non-OECD countries.<BR>Jusqu’à présent, la recherche sur le bonheur est partie du principe que le bien-être subjectif suit une distribution de l’âge en forme de U. Ce document apporte de nouvelles informations sur cette question en testant plusieurs formes de fonctions. En utilisant les données individuelles du World Values Survey sur 44 000 personnes dans 30 pays de l’OCDE avec des espérances de vie longues, nous proposons une fonction hyperbolique. Nous trouvons que la satisfaction de vie atteint un autre niveau maximum à 83 ans, un niveau identique à celui de l’âge de 26 ans. Cette relation hyperbolique avec l’âge est robuste en incluant les effets de cohortes. Nous testons cette relation pour chaque pays de l’OCDE séparément, et l’utilisons en utilisant une sélection de pays non membres de l’OCDE. |
| JEL: | A14 D61 I3 I31 J14 |
| Date: | 2009–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:99-en&r=age |
| By: | Chatterjee, Swarn; Zahirovic-Herbert, Velma |
| Abstract: | This study examines retirement plan participation and savings behavior for American public and private sector employees using the Panel Study of Income Dynamics (PSID) data set. This paper also examines the determinants of preference for a diversified portfolio within the retirement plans. The findings of this study indicate that the population’s plan participation increases with age, income, and education level. The public sector employees are more likely than others to participate in defined benefits plans. Conversely, they are less likely to participate in the defined contribution plans. Also, the public sector employees who participate in defined contribution plans hold lower amounts within their retirement accounts. The public sector employees are more likely to diversify their retirement portfolios or allocate them in bonds or annuities and are less likely to hold all or most of their wealth in stocks. Preference for diversification also increases with age, income and educational attainment. |
| Keywords: | Retirement saving; IRA; Plan Participation; Asset Allocation |
| JEL: | J32 D91 J26 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13546&r=age |