nep-age New Economics Papers
on Economics of Ageing
Issue of 2011‒01‒23
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. How sensitive are subjective retirement expectations to increases in the statutory retirement age? The German case By Coppola, Michela; Wilke, Christina Benita
  2. Le point sur les pensions By Claude Castonguay
  3. Hours of work and retirement behavior By C. Sofia Machado; Miguel Portela
  4. Pension reform, fiscal policy and economic performance By Daniele Franco (editor)
  5. Pathways to a universal basic pension in Greece By Chrysa Leventi; Manos Matsaganis
  6. Age and opportunities for promotion By C. Sofia Machado; Miguel Portela

  1. By: Coppola, Michela; Wilke, Christina Benita (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: Population Aging poses an evident threat to the financial sustainability of pension systems based on a “pay-as-you-go†(PAYG) scheme. To cope with this threat, pension systems have undergone numerous reforms in many countries in order to keep people longer at work. One crucial element of these reforms typically is an increase in the statutory retirement age at which workers are legally allowed to retire. Two questions still remain unanswered: Will people really work longer? Who is more likely to retire before the new legal retirement age? In this paper, we focus on subjective retirement expectations, analysing if and to what extent they are affected by such a policy change. We consider the legislative reform introduced in Germany in 2007, which gradually will increase the statutory retirement age (SRA) from 65 to 67 years. Using the SAVE survey, a representative panel of German households, we estimate the increase of the individuals’ expected retirement age (ERA) as an effect of the reform. Our results show that less productive workers living in relatively wealthier households are more likely to plan an early retirement. The introduction of the reform seems to motivate better educated workers to remain longer in the labour force although it does not seem to completely succeed in keeping women longer in the labour force: especially among the younger cohorts, whose SRA will be 67 years, women are still more likely than men to plan an early retirement. In terms of the magnitude of the effect, we find that the reform shifted the expectations of the younger cohorts by almost two years – if these expectations will be realized, this reform would have been quite successful.
    JEL: D1 D84 H55
    Date: 2010–11–02
  2. By: Claude Castonguay
    Abstract: In the absence of change to the income security system, more than 50% of workers moving toward retirement, with salaries on both sides of the median, will have to reduce significantly their standard of living. For the workers who rely strictly on the Old Age Pension and the Quebec Pension Plan, the solution cannot reside in the setting up of large defined benefit or defined contribution plans in their current form. There is only one conclusion, the existing voluntary approach to complementary pension plans and registered retirement savings plans must be replaced by compulsory participation and the locking-up of retirement savings. For the workers not covered by an employer pension plan, the establishment of a compulsory retirement pension plan, similar to the RRSP, is the solution best adapted to the Quebec context and the income security policy. <P>En l’absence de changements au système de sécurité du revenu, plus de 50 % des travailleurs qui se dirigent vers la retraite, dont les salaires se situent de chaque côté de la médiane, vont devoir réduire significativement leur niveau de vie. Ce sont en grande partie des travailleurs de la petite et moyenne entreprise et des travailleurs autonomes. La question de la retraite des deux tiers des travailleurs qui ne peuvent compter que sur la Pension de la sécurité de la vieillesse et le Régime de rentes du Québec ne peut trouver sa solution dans l’établissement généralisé de régimes à prestation déterminée ou de régimes à cotisation déterminée dans leur forme actuelle. Une conclusion s’impose, le caractère facultatif ou volontaire qui caractérise les régimes complémentaires de retraite et les régimes enregistrés d’épargne retraite doit être remplacé par la participation obligatoire et par l’immobilisation de l’épargne retraite. Pour les travailleurs non couverts par un régime d’employeur, la création d’un régime obligatoire de type RÉER est la solution la mieux adaptée en fonction du contexte québécois et de la politique de la sécurité du revenu.
    Keywords: income security system, pensions, compulsory participation. , système de sécurité du revenu, pensions, participation obligatoire.
    Date: 2011–01–01
  3. By: C. Sofia Machado (Instituto Politécnico do Cávado e do Ave); Miguel Portela (Universidade do Minho - NIPE and IZA)
    Abstract: Using a novel dataset from the 2006 Portuguese Labor Force Survey this paper examines the impact of a voluntary reduction in hours of work, before retirement, on the moment of exit from the labor force. If, as often suggested, flexibility in hours of work is a useful measure to postpone retirement, then a reduction in working hours should be associated with retirement at later ages. Results prove otherwise suggesting that reducing hours of work before retirement is associated with early exits from the labor force. A reduction in hours of work seems to signal the worker’s wish to retire sooner rather than to announce the desire of remaining in the labor market.
    Keywords: aging, retirement, working hours, older workers.
    JEL: J14 J26 J22 J21
    Date: 2011
  4. By: Daniele Franco (editor) (Bank of Italy)
    Abstract: The volume collects the essays presented at the 11th Workshop on Public Finance organised by Banca d'Italia in Perugia on 26-28 March 2009. The workshop examined the issue of pension reform with the purpose of highlighting the recent analytical developments and the most relevant policy issues. Session 1 examined the impact of pension reforms on the labour market and their effects on investments in human capital and productivity growth. Session 2 was devoted to the impact of pension reforms on capital markets, and specifically on the effects of funded schemes. Section 3 considered the impact of reforms on income distribution, within and across generations, and macroeconomic developments. Section 4 dealt="" with the political economy of pension reforms and their role in the broader fiscal policy context.
    Keywords: pension reform, fiscal policy
    JEL: E32 E62
    Date: 2010–04
  5. By: Chrysa Leventi (Athens University of Economics & Business); Manos Matsaganis (Athens University of Economics and Business)
    Abstract: Although basic pension had for years failed to catch the imagination of policy makers in Greece, it was suddenly brought to the agenda in the context of the severe crisis raging since November 2009. In May 2010 the government committed to a harsh austerity programme, aiming at fiscal consolidation, in return for a rescue package easing the sovereign debt crisis. The July 2010 pension reform, a key provision of the austerity programme, provided for the introduction of a near-universal basic pension from 2015. The paper attempts to explain why, paradoxically, the crisis made more realistic a universal basic pension in Greece. We argue, firstly, that social insurance pensions may be ripe for path-breaking reform if heavily subsidised in a non-transparent way, and, secondly, that any progress towards basic income is likely to be gradual, uneven and specific to the national policy context.
    Keywords: Universal basic pension, Greece, economic crisis, 2010 reform
    Date: 2011–01–11
  6. By: C. Sofia Machado (Instituto Politécnico do Cávado e do Ave); Miguel Portela (Universidade do Minho - NIPE and IZA)
    Abstract: Using a panel of new firms and their employees, this paper studies the promotion opportunities for older workers within the same firm. Survival analysis suggests that younger employees experience shorter times to promotion than older workers and, therefore, the latter face a smaller likelihood of promotion. Although men are promoted more often than women, empirical results show that women have shorter survival times to promotion than men. Also, previous promotions are stronger determinants of subsequent ones and this finding provides support to the evidence on promotion “fast-tracks”.
    Keywords: aging, older workers, employment relationships, promotion
    JEL: J14 J21 D21 J62
    Date: 2011

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