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on Economics of Ageing |
| By: | David E. Bloom (Harvard School of Public Health); David Canning (Harvard School of Public Health); Gunther Fink (Harvard School of Public Health); Jocelyn Finlay (Harvard School of Public Health) |
| Abstract: | We analyze panel data for 40 countries over the period 1970-2000 to examine the effect of social security reforms on the labor supply of older men. The data show a trend towards earlier retirement that can be explained by rising income levels. We find that the average retirement age rises significantly when the normal, or early, social security eligibility age rises, the pension benefits for postponing retirement are increased, or the system shifts from defined benefits to defined contributions. A package of social security reforms is capable of substantially increasing the labor supply of older men. |
| Keywords: | Social security reform, retirement, high and middle income countries |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:gdm:wpaper:4809&r=age |
| By: | David E. Bloom (Harvard School of Public Health); David Canning (Harvard School of Public Health); Gunther Fink (Harvard School of Public Health) |
| Abstract: | Population aging is emerging as a major demographic trend in many countries, with potentially important implications for a variety of macroeconomic issues. Notwithstanding these challenges, population aging will likely have a comparatively modest effect on economic growth. Although the changed age distribution would be expected to cause the labor force participation rate to decrease, the ratio of labor force to population will actually increase in most countries. This will occur because the lower youth dependency rate and the increased rate of female labor force participation – both of which may reasonably be expected to follow from the fertility rate declines that are driving population aging – will counterbalance the shifting of adults toward older ages at which labor force participation and savings rates are lower. Behavioral and policy responses to population aging – including higher savings for retirement, a higher rate of human capital accumulation, alternate pension funding plans, and (possibly) increased migration from labor-abundant to labor-scarce countries – also suggest that population aging need not necessarily significantly impede economic growth. |
| Keywords: | Global population, macroeconomics, aging |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:gdm:wpaper:4709&r=age |
| By: | Börsch-Supan, Axel (Asian Development Bank Institute); Ludwig, Alexander (Asian Development Bank Institute) |
| Abstract: | Population aging will be a major determinant of long-run economic development in industrial and developing countries. The extent of the demographic changes is dramatic in some countries and will deeply affect future labor, financial, and goods markets. The expected strain on public budgets and especially on social security has already received prominent attention, but aging poses many other economic challenges that threaten productivity and growth if they remain unaddressed. <p>There is no shortage of policy proposals to address population aging. However, little is known about behavioral reactions, e.g., to pension and labor market reform. This paper sheds light on such reactions in three large Continental European countries. France, Germany, and Italy have large pay-as-you-go pension systems and vulnerable labor markets. At the same time, these countries show remarkable resistance against pension and labor market reform. Key issues taken up in this paper are interactions between pension and labor market policies, and the behavioral reactions to reform. Which behavioral reactions will strengthen, which will weaken reform policies? Can Old Europe prosper even if behavioral reactions counter current reform efforts? |
| Keywords: | aging pension labor reform; labor supply reactions reform; aging europe reform reactions |
| JEL: | D13 E27 F16 F21 H55 J11 J21 |
| Date: | 2009–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0168&r=age |
| By: | Dethier, Jean-Jacques; Pestieau, Pierre; Ali, Rabia |
| Abstract: | Alleviating poverty for the elderly requires a different approach from other age groups, and a minimum pension is likely to be the only viable option. This paper examines the impact on old age poverty and the fiscal cost of universal minimum old age pensions in 18 Latin American countries using recent household survey data. First the authors measure old age poverty rates for these countries. Then they discuss the design of minimum pensions schemes -- means-tested or not -- as well as the disincentives they introduce for the economic and social behavior of households including labor supply, saving and family solidarity. Finally, the authors use household survey data to simulate the fiscal cost and the impact on poverty rates of alternative minimum pension schemes in the 18 countries. They show that a universal minimum pension would substantially reduce poverty among the elderly (except in Argentina, Brazil, Chile and Uruguay where minimum pension systems already exist and poverty rates are low). Such schemes have much to be commended in terms of incentives, spillover effects and administrative simplicity, but they have a high fiscal cost. The latter is a function of the age at which benefits are awarded, the prevailing longevity, the generosity of benefits, the efficacy of means testing, and the fiscal capacity of the country. |
| Keywords: | Rural Poverty Reduction,Population Policies,Debt Markets,Regional Economic Development |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5292&r=age |
| By: | Moussaly, Karim |
| Abstract: | Amidst the financial crisis and changes in the labour market, retirement savings plans are subject to greater scrutiny. The retirement income system in Canada stands on both public and private retirement savings plans. This article describes the coverage of Canadian workers by private retirement savings plans. Using cross-sectional tax data from the T1 Family File, we describe the coverage of Canadian employed tax filers aged 15 or more by employer-sponsored pension plans (EPPs) and whether or not they contributed to Registered Retirement Savings Plans (RRSPs) in 1997, 2000, 2003, 2006 and 2008. The share of employed tax filers participating in either type of plan declined from 54% in 1997 to 50% in 2008 and this is mainly driven by a decreasing share of employed tax filers contributing to a RRSP. The share of employed tax filers participating in an EPP remained fairly stable over the period. |
| Keywords: | income;retirement;savings |
| JEL: | J26 E21 |
| Date: | 2010–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22711&r=age |
| By: | Casamatta, Georges; Gondim, Joao Luis |
| Abstract: | We assess the political support for parametric reforms of the Pay-As-You-Go pension system following a downward fertility shock. Using a continuous time overlapping generations model, we argue that reforms that consist in cutting pension benefits or increasing the retirement age are likely to receive a strong political support. An increase in the contribution rate has, on the contrary, fewer chances to be approved by the majority of the voters. This framework also allows to identify the costs and benefits of postponing each type of reform and to determine how the timing of the dierent reforms affects their political support. |
| Keywords: | Pay-As-You-Go, parametric reforms, fertility shock |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:22204&r=age |
| By: | Fabian Lange; Doug McKee |
| Abstract: | This paper develops a new method of estimating rich, dynamic models of health based on multiple health measures available in the HRS. We apply these methods to investigate what generates the large socioeconomic gradient in health. Preliminary results suggest a large role for initial differences in health at age 50 that persist into old age. |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2010-4&r=age |
| By: | Ministry of Health, Labour and Welfare, Japan; Junichi Sakamoto |
| Abstract: | The public pension system of Japan provides coverage for all, irrespective of occupation and income. Corporate pension plans provide additional benefits over the public pension in order to meet the diversified financial needs in retirement and play a key role in enriching people‘s life after retirement. The majority of corporate pensions in Japan are defined-benefit type. Consequently, a great amount of attention is paid to benefit rights. Nevertheless, in order to avoid the discontinuation of pension plans due to over-emphasis on benefit rights, Japan introduced a measure under the stagnant economy during the 1990s allowing pension plans to reduce accrued benefits under certain strict conditions, only when the government acknowledges that the sponsoring company will go bankrupt if employers are forced to continue to contribute to the pension plans to the same extent. At the same time, Japan introduced another measure allowing pension plans to use smoothing for valuing its assets in order to avoid temporary market fluctuations. As a result, corporate pension plans in Japan became manageable from a long-term perspective and able to adopt a flexible plan design whilst still ensuring benefit rights.<P>L’intervention des pouvoirs publics dans les régimes privés de retraite professionnels au Japon depuis la crise économique des années 1990<BR>Le système public de retraite du Japon couvre tous les individus, indépendamment de leur situation professionnelle et de leurs revenus. Les régimes de retraite d'entreprise offrent des prestations complémentaires, qui s'ajoutent à la pension publique et permettent de satisfaire des besoins financiers diversifiés à la retraite, et contribuent de manière essentielle à améliorer la qualité de vie des individus après leur départ en retraite. La majorité des régimes de retraite d'entreprise sont des dispositifs à prestations définies au Japon. En conséquence, une grande attention est accordée aux droits à prestations. Néanmoins, afin d'éviter qu'une focalisation excessive sur ces droits à prestations ne débouche sur la liquidation de certains régimes de retraite, le Japon a adopté pendant la période de stagnation économique des années 90 des dispositions permettant aux régimes de retraite de réduire les droits constitués sous des conditions strictes, uniquement si le gouvernement reconnaît que l'entreprise promoteur du régime fera faillite si l'employeur est contraint de continuer à financer le régime considéré dans les mêmes proportions. Parallèlement, le Japon a adopté d'autres dispositions permettant aux régimes de retraite d'utiliser une méthode de lissage pour l'évaluation de leurs actifs, afin d'éviter des variations liées aux fluctuations temporaires des cours du marché. En conséquence, les régimes de retraite d'entreprise du Japon sont devenus gérables dans une perspective à long terme, et ont pu adopter une structure souple tout en préservant les droits à prestations. |
| Keywords: | Tax-qualified Pension Plan system (TQPP), Employees' Pension Fund system (EPF), defined-benefit pension, defined-contribution pension, plan de retraite défiscalisé (PRD), fonds de pension des salariés (FPS), régime de retraite à prestations définies, régime de retraite à cotisations définies |
| JEL: | D14 D91 E21 G11 G38 J14 J26 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaab:41-en&r=age |
| By: | Bommier, Antoine |
| Abstract: | The paper discusses the impact of longevity extension on aggregate wealth accumulation, accounting for changes in individual behaviors as well as changes in population age structure. It departs from the standard literature by adopting a formulation of individual preferences that accounts for temporal risk aversion. Human impatience is then closely related to mortality rates and aggregate wealth accumulation appears to be much more sensitive to demographic factors than with the traditional approach. Illustrations are provided using historical mortality data from different countries. |
| Keywords: | longevity, life cycle savings, wealth accumulation |
| JEL: | D91 E21 J1 |
| Date: | 2009–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:22173&r=age |
| By: | Rocha, Roberto; Vittas, Dimitri; Rudolph, Heinz P. |
| Abstract: | This paper provides a comparative summary of the payout phase of pension systems in five countries -- Australia, Chile, Denmark, Sweden, and Switzerland. All five countries have large pension systems with mandatory or quasi-mandatory retirement savings schemes. But they exhibit important differences in the structure and role of different pillars, regulation of payout options, level of annuitization, market structure, capital regulations, risk management, and use of risk sharing arrangements. The paper summarizes the experience of these countries and highlights the lessons they offer to other countries. |
| Keywords: | Pensions&Retirement Systems,Debt Markets,Emerging Markets,Insurance&Risk Mitigation,Investment and Investment Climate |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5288&r=age |
| By: | Vittas, Dimitri; Rudolph, Heinz; Pollner, John |
| Abstract: | Over the past decade or so, most Central and Eastern European countries have reformed their pension systems, significantly downsizing their public pillars and creating private pillars based on capitalization accounts. Early policy attention was focused on the accumulation phase but several countries are now reaching the stage where they need to address the design of the payout phase. This paper reviews the complex policy issues that will confront policymakers in this effort and summarizes recent plans and developments in four countries (Poland, Hungary, Estonia, and Lithuania). The paper concludes by highlighting a number of options that merit detailed consideration. |
| Keywords: | Debt Markets,Pensions&Retirement Systems,Financial Literacy,Insurance&Risk Mitigation,Investment and Investment Climate |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5276&r=age |
| By: | Irene Albarrán; Pablo J. Alonso; Juan Miguel Marín |
| Abstract: | It is usually considered that the proportion of handicapped people grows with age. Namely, the older the man/woman is, the more level of disability he/she suffers. However, empirical evidence shows that this assessment is not always true, or at least, it is not true in the Spanish population. This study tries to assess the impact of age on disability in Spain. It is divided into three different parts. The first one is focused in describing the way disability is measured in this work. We used a former index defined by the authors that distinguishes between men and women. The second one is focused in a literature review about the methods used in this paper. This section emphasizes on local regression, feed forward neural networks and BARS. Finally, in the last section estimations are undertaken. Several methods are used and, therefore, there are fairly differences in the results, not only among the methodologies, but also between genders. |
| Keywords: | Disability, Local estimation, Splines, Neural networks, BARS |
| JEL: | C10 C11 C45 C50 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wsrepe:ws102410&r=age |
| By: | Rocha, Roberto; Vittas, Dimitri |
| Abstract: | This paper examines the policy issues, constraints and options facing policymakers in promoting the development of sound markets for retirement products. It discusses the various risks faced by pensioners and the risk characteristics of alternative retirement products and also reviews the risks faced by providers of retirement products and the management and regulatory challenges of dealing with these risks. The paper focuses on policies that could be adopted by developing and transitioning countries where financial and insurance markets are not well developed. It argues for promoting an adequate level of annuitization but avoiding excessive annuitization. It also argues for favoring combinations of payout options, covering different products at a particular point in time as well as different payout options over time. The paper also discusses the choice between centralized and decentralized markets and highlights the basic elements of an effective regulation of risk management. |
| Keywords: | Debt Markets,Pensions&Retirement Systems,Insurance&Risk Mitigation,Non Bank Financial Institutions,Emerging Markets |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5289&r=age |
| By: | Michele Belloni (CeRP - Collegio Carlo Alberto, Turin); Rob Alessie (University of Groningen) |
| Abstract: | Using Italian data this study estimates the option value model in order to quantify the effect of financial incentives on retirement choices. As far as we know, this is the first empirical study which estimates the conditional multiple-years (CMY) model put forward by Stock and Wise (1990). This implies that we have accounted for dynamic self-selection bias. For the subsample of females the CMY model yields plausible estimates of the preference parameters such as the marginal utility of leisure. This last parameter is typically underestimated if one does not take into account the self-selection problem. From our results it becomes clear that dynamic self-selection results in a considerable downward-bias in the estimate of the marginal utility of leisure. We also performed a simulation study to gauge the effects of a dramatic pension reform. It turns out that the underestimation of the marginal utility of leisure translates into a sizable overprediction of the impact of the reform. For males we also obtain plausible estimates. The results for males should be interpreted with caution because we are not able to fully correct for dynamic self-selection bias. |
| Keywords: | retirement, option value model, dynamic self-selection |
| JEL: | J26 H55 C33 C34 C35 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:crp:wpaper:92&r=age |
| By: | Saint-Paul, Gilles |
| Date: | 2009–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:21943&r=age |
| By: | Jorgensen, Ole Hagen |
| Abstract: | This paper develops a link between four central components of the demographic transition: survival rates; fertility decisions; altruistic intergenerational transfers from workers toward their parents; and economic growth. An increase in child survival is found to reduce the fertility rate and altruistic transfers, and thereby increase the savings rate and the productivity growth rate. The analysis illustrates the key role of child health in the demographic transition. |
| Keywords: | Population Policies,Economic Theory&Research,Emerging Markets,Access to Finance,Health Monitoring&Evaluation |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5304&r=age |
| By: | Wei Sun; Anthony Webb; Natalia Zhivan |
| Abstract: | Medical and long-term care costs represent a substantial uninsured risk for most retired households. A recent brief from the Center for Retirement Research at Boston College reported new findings on average lifetime health care costs at selected ages and on the distribution of those costs. This second brief explores the relationship between health care costs and health status. That is, it considers whether current good health is a predictor of low health care costs over one’s remaining lifetime. If so, healthy households could set aside less for health care expenditures than the unhealthy, and households that stay healthy could release for general consumption money that they had previously set aside for health care costs. Our main finding is that although the current health care costs of healthy retirees are lower than those of the unhealthy, the healthy actually face higher total health care costs over their remaining lifetime. To illustrate, the expected present value of lifetime health care costs for a couple turning 65 in 2009 in which one or both spouses suffer from a chronic disease is $220,000, including insurance premiums and the cost of nursing home care, and 5 percent can expect to spend more than $465,000. The comparable numbers for couples free of chronic disease are substantially higher, at $260,000 and $570,000, respectively. This brief explains this somewhat counterintuitive finding. |
| Keywords: | savings and consumption, health |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2010-8&r=age |