nep-age New Economics Papers
on Economics of Ageing
Issue of 2011‒12‒13
nine papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Demographic Change Across The Globe Maintaining Social Security In Ageing Economies By Marga Peeters; Loek Groot
  2. Financing public education when altruistic agents have retirement concerns By Daniel Montolio (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)); Amedeo Piolatto (University of Barcelona (UB) and Barcelona Institute of Economics (IEB))
  3. Early Retirement and Financial Incentives: Differences Between High and Low Wage Earners By Rob Euwals
  4. Firm-Sponsored Classroom Training: Is It Worth It for Older Workers? By Dostie, Benoit; Léger, Pierre Thomas
  5. Do pension wealth, pension cost and the nature of pension system affect coverage? Evidence from a country where pay-as-you-go and funded systems coexist By Carpio, Miguel Angel
  6. Befriending of older adults. By Bauer, Annette; Knapp, Martin; Perkins, Margaret
  7. The Spirit of the Welfare State? Adaptation in the Demand for Social Insurance By Martin Ljunge
  8. Marital Status and Derived Pension Rights: A Political Economy Model of Public Pensions with Borrowing Constraints By Tetsuo Ono
  9. A Political Economy Theory of Government Debt and Social Security By Ryo Arawatari; Tetsuo Ono

  1. By: Marga Peeters; Loek Groot
    Abstract: This paper investigates the fiscal pressure from demographic change in relation to the labour marketspace for fifty countries that cover 75% of the world population. The pressure-to-space indicator ranks Poland, Turkey and Greece high. Apart from Turkey and India, developing countries rank low due to low spending on the old (pensions, health care) and the young (education, family costs). Peculiarly, economies with higher pressure have more space. The hypothesis that ageing economies have started using their space in anticipation to higher demographic pressure is rejected. Raising the retirement age in developed economies by five years alleviates the pressure by almost 30% and creates 10% more labour market space.
    Keywords: Demography, dependency rates, labour market, social security, pensions, government spending.
    JEL: D6 E24 E62 H51 H52 H53 H55 J0 J11 J18 J21 J26 O57
    Date: 2011–11–18
  2. By: Daniel Montolio (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)); Amedeo Piolatto (University of Barcelona (UB) and Barcelona Institute of Economics (IEB)) (Universitat de Barcelona)
    Abstract: Human capital and, therefore, education have an impact on the societys future welfare. In this paper we study the connection between the voters support to public education and the retirement concerns. We show that voters anticipate the positive effect of education on future pensions. The support for a publicly financed education system increases, the more redistributive the pension system is, and this is true also amongst citizens preferring a private school. We also show that the ends against the middle equilibrium can occur even when the voters preferred tax rate is decreasing in income.
    Keywords: olg, pension system, altruism, education, voting
    JEL: D72 H55 H31 H42 H52
    Date: 2011
  3. By: Rob Euwals
    Abstract: <p>This paper investigates the impact of financial incentives on early-retirement behaviour for high and low wage earners. </p><p>Using a stylized life-cycle model, we derive hypotheses on the behaviour of the two types. We use administrative data and employ two identification strategies to test the predictions. First, we exploit exogenous variation in the replacement rate over birth cohorts of workers who are eligible to a transitional early retirement scheme. Second, we employ a regression discontinuity design by comparing workers who are eligible and non-eligible to the transitional scheme. The empirical results show that low wage earners are, as predicted by the model, more sensitive to financial incentives. The results imply that low wage earners will experience a stronger incentive to continue working in an optimal early retirement scheme.</p>
    JEL: J16 J22 J61
    Date: 2011–11
  4. By: Dostie, Benoit (HEC Montreal); Léger, Pierre Thomas (HEC Montreal)
    Abstract: We use longitudinal linked employer-employee data and find that the probability of participating in firm-sponsored classroom training diminishes rapidly for workers aged 45 years and older. Although the standard human capital investment model predicts such a decline, we also consider the possibility that returns to training decline with age. Taking into account endogenous training decisions, we find that the training wage premium diminishes only slightly with age. However, estimates of the impact of training on productivity decrease dramatically with age, suggesting that incentives for firms to invest in classroom training are much lower for older workers.
    Keywords: wages, productivity, linked employer-employee data, aging, firm-sponsored classroom training
    JEL: C23 D24 J31
    Date: 2011–11
  5. By: Carpio, Miguel Angel
    Abstract: This paper proposes a nested model, based on an additive random utility model, to analyze whether pension wealth and pension cost affect the probability that a worker affiliates to a pension program, and to observe differentiated effects regarding the nature of the pension system (pay-as-you-go or funded). The analysis focuses on Peru because the peculiar coexistence of a pay-as-you-go and a funded system allows observing first whether a worker is subscribed or not, and then his choice between pay-as-you-go and funded system. The data consists in five cross sections from the ENAHO between 2005 and 2009. Results show that changes on costs have a greater impact over the probability of affiliation than changes on benefits, and that changes affect more when applied to the funded system than when applied to the pay-as-you-go. Variables related with the contracting firm have a large impact. Hence, this paper provides a tool to evaluate measures to solve the coverage problems of pension programs.
    Keywords: nested model; pension wealth; coverage; pay-as-you-go; funded
    JEL: H55 J32 J82
    Date: 2011–11–21
  6. By: Bauer, Annette; Knapp, Martin; Perkins, Margaret
    Date: 2011–01
  7. By: Martin Ljunge (Department of Economics)
    Abstract: Young generations demand substantially more social insurance than older generations, although program rules have been constant for decades. I postulate a model where the utility of taking up social insurance benefits depends on the past behavior of older generations. The model is estimated with individual panel data. The intertemporal mechanism estimated can account for half of the younger generations’ higher demand for social insurance benefits. The influence of older generations’ behavior remains when instrumenting using mortality rates, which makes a compelling case for a causal intertemporal influence on individual demand.
    Keywords: social insurance; adaptation; role models
    JEL: H31 I18 J22 Z13
    Date: 2011–11–16
  8. By: Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: This paper develops an overlapping-generation model featuring four types of households: single female, single male, one-breadwinner couple and two-breadwinner couple. The paper considers majority voting over public pension in the presence of derived pension rights for one-breadwinner couples. In an economy with a low in- tertemporal elasticity of substitution, borrowing-constrained one-breadwinner cou- ples may prefer a lower tax rate than do other types of households, although the for- mer attain a higher benefit-to-cost ratio of public pension than do others. Changes in the gender wage gap, the level of derived pension rights, and the fraction of two- breadwinner couples produce an inverse U-shaped relationship between the relevant variable and the tax rate.
    Keywords: Borrowing constraint; Marital status; Gender wage gap; Derived pen- sion rights; Political economy
    JEL: D72 H55 J12
    Date: 2011–11
  9. By: Ryo Arawatari (Graduate School of Economics, Nagoya University); Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: This paper analyzes the determinants of government debt and social security for the old in a closed-economy, overlapping-generation model. Under the probabilistic voting, the model presents (i) an intergenerational link of resource allocation via debt and social security; (ii) multiple political equilibria; and (iii) a negative cor- relation between tax and debt. These three results are robust to the introduction of public goods as an alternative government expenditure or to the introduction of income heterogeneity within a generation.
    Keywords: Government debt; Social security; Overlapping generations; Proba- bilistic voting
    JEL: D72 H55 H63
    Date: 2011–11

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