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on Economics of Ageing |
| By: | Park, Donghyun (Asian Development Bank) |
| Abstract: | Due to population aging, weakening of family-based support, and other factors, old-age income support is becoming an issue of growing importance throughout Asia. This is especially true in East Asia and Southeast Asia where the demographic transition is already well under way. This paper provides a broad overview of the current state of the pension systems in People’s Republic of China, Indonesia, Republic of Korea, Malaysia, Philippines, Singapore, Thailand, and Viet Nam; diagnoses the pension systems; and identifies their major structural weaknesses. Key systemic failures were found to be low coverage, inadequate benefits, lack of financial sustainability, and insufficient support for the elderly poor. The paper concludes with some specific policy directions for pension reform to strengthen the capacity of Asian pension systems in delivering economic security for the looming large and growing army of the elderly in the region. |
| Keywords: | Pension; social security; Asia |
| JEL: | H55 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0165&r=age |
| By: | Bonin, Holger (ZEW Mannheim) |
| 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 the global financial crisis 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: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp11&r=age |
| By: | Aïda Solé-Auró (RFA-IREA, University of Barcelona, Spain); Montserrat Guillén (RFA-IREA, University of Barcelona, Spain); Eileen M. Crimmins (Andrus Gerontology Center. University of Southern California) |
| Abstract: | Objective: This study examines health care utilization of immigrants relative to the native-born populations aged 50 years and older in eleven European countries. Methods. We analyzed data from the Survey of Health Aging and Retirement in Europe (SHARE) from 2004 for a sample of 27,444 individuals in 11 European countries. Negative Binomial regression was conducted to examine the difference in number of doctor visits, visits to General Practitioners (GPs), and hospital stays between immigrants and the native-born individuals. Results: We find evidence those immigrants above age 50 use health services on average more than the native-born populations with the same characteristics. Our models show immigrants have between 6% and 27% more expected visits to the doctor, GP or hospital stays when compared to native-born populations in a number of European countries. Discussion: Elderly immigrant populations might be using health services more intensively due to cultural reasons. |
| Keywords: | count data, physician services, immigration. |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2009-10&r=age |
| By: | James Marton (Georgia State University); Stephen A. Woodbury (W.E. Upjohn Institute and Michigan State University) |
| Abstract: | We estimate the effect of employer offers of retiree health benefits (RHBs) on the timing of retirement using a sample of Health and Retirement Study (HRS) men observed over a period of up to 12 years. We hypothesize that the effect of RHBs differs for workers of different ages—a hypothesis we can test now that the main HRS cohort has aged sufficiently. We apply three wellknown panel data estimators and find that, for men in their 50s, RHBs have little or no effect on retirement decisions; however, a substantial effect emerges for men in their early 60s. We use simulations to illustrate how RHBs alter retirement patterns. |
| Keywords: | Retirement, Health Insurance, Employee Benefits, Panel Data |
| JEL: | J26 I18 D14 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:10-163&r=age |
| By: | Ingmar Kumpmann; Michael Gühne; Herbert Buscher |
| Abstract: | Several factors bring about a rise in old age poverty in Germany, especially in East Germany. Using data from the German Socio-economic Panel (SOEP) we examine causes and extent of old age poverty in Germany. We begin our inquiry with a cross section regression in order to determine the impact of several factors on retirement incomes in Germany. In the second step we perform an income projection of today’s 50 to 55 year-old people for the year 2023. In doing so, we take into account different sources of income, including several forms of capital income and the calculated rent of owner-occupied houses and flats. We find a significant rise in old age poverty especially in East Germany as a consequence of rising unemployment after the German unification. |
| Keywords: | old age poverty, pension, old age income |
| JEL: | I32 J14 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:8-10&r=age |
| By: | Alicia H. Munnell; Laura Quinby |
| Abstract: | Much attention has focused on the shift in the private sector from defined benefit to defined contribution plans, primarily 401(k)s. Often forgotten, however, is that, at any given moment in time, only about half of private sector workers are covered by any sort of employer-sponsored plan. This lack of coverage has two implications. First, a substantial proportion of households – roughly one-third – ends up with no pension coverage at all during their entire worklife and must rely exclusively on Social Security during retirement. And, even under current law, Social Security will provide less in the future relative to pre-retirement earnings than it has in the past. Second, with median job tenure of about four years in 2008, many employees move in and out of coverage so that they end up with inadequate 401(k) balances. This brief proceeds as follows. The first section describes the extent to which private sector workers are covered by any retirement plan. The second section explores the implications of the lack of universal coverage. The third section discusses policy initiatives to improve coverage. The key finding is that, absent a government initiative, pension coverage is unlikely to increase, which – coupled with declining earnings replacement under Social Security – means that many future retirees will end up with inadequate incomes. |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2009-9-26&r=age |
| By: | Alicia H. Munnell; Anthony Webb; Francesca Golub-Sass |
| Abstract: | The National Retirement Risk Index measures the share of American households who are ‘at risk’ of being unable to maintain their pre-retirement standard of living in retirement. The Index results from comparing households’ projected replacement rates – retirement income as a percent of pre-retirement income – with target rates that would allow them to maintain their living standard. The results showed that even if households work to age 65 and annuitize all their financial assets, including the receipts from reverse mortgages on their homes, in 2004 43 percent would have been ‘at risk’ of being unable to maintain their standard of living in retirement. The NRRI was originally constructed using the Federal Reserve’s 2004 Survey of Consumer Finances (SCF). The SCF is a triennial survey of a nationally representative sample of U.S. households, which collects detailed information on households’ assets, liabilities, and demographic characteristics. The release of the Federal Reserve’s 2007 Survey of Consumer Finances seemed like a great opportunity to re-assess Americans’ retirement preparedness... |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2009-9-22&r=age |
| By: | Arie Kapteyn |
| Abstract: | Although aging is a global phenomenon, there are large differences across countries in both the speed of aging and the current state they are in. Furthermore countries adopt vastly different policies. This creates a natural laboratory that scientists can use to understand how policies affect outcomes. This paper discusses under what circumstances data from different countries can be used for inference about policy effects. Although currently comparable health and retirement data are being collected in some 25 countries, the use of such data requires careful modeling of differences in institutions and in response styles across countries. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:741&r=age |
| By: | Ashby H.B. Monk |
| Abstract: | Over the past half century, employer-sponsored defined benefit (DB) pensions have been crucial sources of retirement income and security. However, the popularity of DB pensions in the private sector has dwindled, and competitive pressures may drive DB plans from the private sector altogether. Significantly, this burden is not only a US phenomenon, as UK private plan sponsors are also struggling to manage their DB pension commitments. Nonetheless, a fundamental difference of opinion exists between UK and US policymakers about how to address the decline of the DB system. In the United Kingdom, DB stakeholders have accepted the plans’ decline as inevitable and are now promoting alternative mechanisms to shore up retirement security. For example, in the Pensions Act of 2008, the UK government mandated that employers enroll eligible employees into a workplace pension and created a new second pillar pension institution, the Personal Accounts Delivery Authority (PADA), to facilitate the new policy. In addition, UK policymakers, and indeed most DB stakeholders, have endorsed the use of pension buyouts as a way to manage the decline of this once important institution. A buyout allows firms to pay an insurance company a fee to take over the assets and liabilities of their plan, thereby freeing them from their DB obligations. As such, UK policymakers perceive buyouts to be part of the process of unwinding an unsustainable institution, and most see the rising popularity of pension buyouts as a direct response to the increasingly burdensome nature of DB pensions... |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2009-9-21&r=age |
| By: | Cigno, Alessandro (University of Florence) |
| Abstract: | Conventional pension systems suffer from a design defect which makes them financially unsustainable, and a source of inefficiency for the economy as a whole. The paper outlines a second-best policy which includes a public pension system made up of two parallel schemes, a Bismarckian one allowing individuals to qualify for a pension by working and paying contributions in the usual way, and an unconventional one allowing them to qualify for a pension by having children, and investing time and money in their upbringing. |
| Keywords: | pension reform, implicit pension taxes and subsidies, child benefits, fertility, labour productivity |
| JEL: | D13 D64 H55 J13 J14 J26 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp4&r=age |
| By: | F. HEYLEN; R. VAN DE KERCKHOVE; |
| Abstract: | We build and parameterize a general equilibrium OLG model for an open economy to study hours of work in three age groups, education of the young, and aggregate per capita growth. The composition of fiscal policy plays a crucial role. The government sets tax rates on labor, capital and consumption. It allocates its revenue to productive expenditures (mainly for education), consumption and ‘non‐employment’ benefits. Labor taxes and benefits may differ across age groups. We find that our model’s predictions match the facts remarkably well for all key variables in many OECD countries. We then use the model to investigate the effects of various fiscal policy shocks on employment by age and growth, as well as on welfare of current and future generations. We identify ‘non‐employment’ benefits and labor taxes as the main policy variables affecting employment. Productive government expenditures are the most effective with respect to long‐run output and growth. Long‐run output and growth may benefit also from labor tax cuts targeted at older workers. Considering welfare effects, however, these policy measures may not be the ones preferred most by current generations. |
| Keywords: | employment by age, endogenous growth, fiscal policy, overlapping generations |
| JEL: | E62 J22 O41 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:09/623&r=age |
| By: | Annika Sundén |
| Abstract: | The steep drop in financial markets in 2008 coupled with the ongoing economic recession pose immediate challenges for some public pension systems, particularly those that rely partly on equity investments. In the case of Sweden, the crisis provides an initial ‘stress test’ for a major pension system reform implemented earlier this decade. The new system created by the reform was designed to be fiscally sustainable by including automatic adjustment mechanisms to maintain balance in response to short-term economic and financial fluctuations and long-term demographic changes. Last fall’s plummeting stock market produced a decline in Sweden’s pension reserve funds and triggered a first-time automatic reduction in the pension indexation scheduled to occur in 2010. In response, policymakers decided to spread out the required adjustment over a longer period. This brief is organized as follows. The first section describes how the Swedish pension system is designed to maintain fiscal stability. The second section documents trends in the system’s financial status. The third section explores the potential impact of the economic crisis on pension benefits under the system’s original rules. The fourth section describes the policy response. The final section concludes that even automatic adjustments may produce offsetting political considerations. |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2009-9-25&r=age |
| By: | Matthew D. Shapiro (University of Michigan and NBER) |
| Abstract: | Consumption provides a comprehensive measurement of economic well-being. This research shows that consumption is well-insured with respect to health status and widowing. Using data from the Health and Retirement Study (HRS) and its CAMS supplement, it shows that consumption responds little to changes in health status even though adverse health generates substantial out-of-pocket medical expenses. Similarly, the effect of widowing on consumption, though substantial, is not strongly driven by changes in economic resources. Men experience little loss of monetary resources when being widowed. Women have the same overall loss in consumption as men when being widowed despite greater declines in economic resources. Hence, despite the adverse consequences for income and wealth for female widows, women experience no greater drop in consumption from losing a spouse than do men. |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp211&r=age |
| By: | Vistesen, Claus |
| Abstract: | This thesis is built upon two core arguments. The first is the notion that the demographic transition should be narrated through the perspective of ageing rather than population growth and the second is that ageing on a macroeconomic level represents a strong driver of international capital flows. These two arguments are used to discuss the standard prediction in a life cycle framework that ageing leads to dissaving in the aggregate and thus how old economies should tend towards running current account deficits. Using Japan and Germany as the subjects of analysis, this thesis develops the idea that rapidly ageing societies are not, in the main, characterized by dissaving but rather by the fight against it. Finally, a small empirical exercise acts as a perspectivation on the results to suggest why ageing might lead to a reliance on exports and foreign asset income to achieve growth and what this means in a global context. |
| Keywords: | demographics; international capital flows; life cycle economics; |
| JEL: | F02 J1 D91 E21 |
| Date: | 2010–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21929&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 construct life-cycle profiles of health care spending and financing using data from the Medical Expenditure Panel Survey (MEPS). We separate pure age effects from time and cohort effects by estimating a seminonparametric partial linear model. After controlling for time and cohort effects, we find that medical expenditure age profiles follow an upward trend whereas private insurance take-up profiles over age exhibit a hump-shape. In addition, we find that time effects (i.e. productivity effects, business cycle effects, etc.) dominate cohort effects (i.e. initial condition effects) in size despite the fact that we adjust for inflation in the variables measuring medical expenditures. Health expenditure profiles based on simple inflation adjusted values therefore overpredict the effects of age on health expenditures, especially for agents older than 60. |
| Keywords: | Age dependent U.S. health care spending, U.S. health expenditure decomposition, life-cycle profiles, partial linear models, pseudo panels, medical expenditure panel survey (MEPS). |
| JEL: | I10 I11 C14 C23 D12 D91 J10 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2010-09&r=age |
| By: | Nicolas Gérard Vaillant (LEM - Lille - Economie et Management - CNRS : UMR8179 - Université des Sciences et Technologies de Lille - Lille I - Fédération Universitaire et Polytechnique de Lille); François-Charles Wolff (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272) |
| Abstract: | Objectives: Little is known about the health status of older migrants living in Europe. Using detailed data collected in 2003, we investigate differences in health status by origin country within the older immigrant population living in France using a self-rated health measure. Study design: The database used in this research is the ‘Passage à la Retraite des Immigrés' survey, conducted from November 2002 to February 2003 on a sample of 6,211 migrants aged 45 to 70 and living in France at the time of survey. Methods: A difficulty with the self-rated outcome is that it may not be comparable between different origin groups, in particular because of cultural and linguistic differences. We thus estimate generalized ordered Probit models and construct for each respondent an indicator of health net of cross-cultural effects. Results: Male immigrants from Southern Africa and Asia and female immigrants from Northern Europe, Southern Africa and Asia are more likely to be in good health, while the health status is lower among immigrants from Eastern Europe living in France. Conclusion: The diversity in health status within the immigrant population is large in France. These results are helpful in order to target the more disadvantaged origin groups and to adjust the provision of health care. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00449608_v1&r=age |