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on Economics of Ageing |
| By: | Richard W. Evans (Department of Economics, Brigham Young University); Kerk L. Phillips (Department of Economics, Brigham Young University) |
| Abstract: | In 2008, the Utah Retirement System experienced a negative return of almost 25 percent on its portfolio. This resulted in an underfunding of the pension system. In 2010 the Utah legislature reformed state pension participation, placing all new employees hired after mid-2011 in a new hybrid pension system. Employees hired prior to July 2011 continue to participate in the previous defined benefits program. This paper models and simulates the effects of Utah's pension reform on the balance in the defined benefits fund. In our baseline simulations, we find that the recent reform has extended fund solvency, but not eliminated the threat. Our simulations show that there is at least a ten percent chance of pension fund insolvency sometime in the next two decades. |
| Keywords: | Pension reform, Numerical simulation, Simulation modeling, State pensions, Utah |
| JEL: | C63 C68 E37 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:byu:byumcl:201201&r=age |
| By: | Hairault, Jean-Olivier (University of Paris 1 Panthéon-Sorbonne); Langot, François (University of Le Mans); Zylberberg, Andre (University of Paris 1 Panthéon-Sorbonne) |
| Abstract: | As a preliminary step, we first provide some new empirical evidence that labor market conditions affect retirement decisions at the individual level: unemployed people are more likely to retire. Our main objective in this paper is then to propose an equilibrium unemployment approach to retirement decisions that allows us to unveil the factors which explain why unemployed workers choose to retire earlier and the conditions under which this behavior is optimal. Two main conclusions emerge: the retirement decision of unemployed workers depends on the labor-market frictions whereas that of employed workers does not; the existence of search externalities makes the retirement age of unemployed workers intrinsically suboptimal. Considering Social Security policy issues, we show that the complete elimination of the implicit tax on continued activity is not necessarily welfare-optimizing in a second best world where the labor market equilibrium suffers from distortions. |
| Keywords: | search, matching, retirement, Social Security |
| JEL: | J22 J26 H55 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6511&r=age |
| By: | Axel H. Börsch-Supan; Michela Coppola; Anette Reil-Held |
| Abstract: | Riester pensions are voluntary, but heavily subsidized private pension schemes in Germany. They were designed as a matching defined contribution scheme to fill the emerging “pension gap” that is being generated by the gradually declining generosity of the public pay-as-you-go pensions in response to population aging. This paper investigates how the uptake of the recently introduced “Riester pensions” depends on the state-provided saving incentives and how well the targeting to families and low-income households has worked in practice. It documents the costs of the scheme, and collects circumstantial evidence on displacement effects between saving for old-age provision and other purposes. After a slow start and several design changes, Riester pension plans took off very quickly. While saving incentives were effective in reaching parents, they were somewhat less successful in attracting low-income earners, although Riester pensions exhibit a more equal pattern by income than occupational pensions and unsubsidized private pension plans. Riester pension savings totaled €9.4bn in 2010 with an associated cost of €3.5bn. One average one Euro of subsidies is thus associated with 2 Euros of households’ own Riester saving. There is no evidence that Riester pensions have crowded out other saving. While households who plan to purchase housing and who attach high importance to a bequest motive are less likely to have a Riester pension, several regression results show that occupational pensions and other forms of private pensions act as complements rather than as substitutes. Aggregate national saving has increased since the introduction of Riester pensions. |
| JEL: | D14 D91 H31 H55 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18014&r=age |
| By: | Bratberg, Espen (University of Bergen); Nilsen, Øivind Anti (Norwegian School of Economics (NHH)); Vaage, Kjell (University of Bergen) |
| Abstract: | This paper addresses whether children's exposure to parents receiving disability benefits induces a higher probability of receiving such benefits themselves. Most OECD countries experience an increasing proportion of the working-age population receiving permanent disability benefits. Using data from Norway, a country where around 10% of the working-age population rely on disability benefits, we find that the amount of time that children are exposed to their fathers receiving disability benefits affects their own likelihood of receiving benefits positively. This finding is robust to a range of different specifications, including family fixed effects. |
| Keywords: | disability, intergenerational correlations, siblings fixed effects |
| JEL: | H55 J62 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6508&r=age |
| By: | Green, David A.; Riddell, W. Craig |
| Abstract: | We study the relationship between age and literacy skills in Canada, Norway and the U.S. – countries that represent a wide range of literacy outcomes -- using data from the 1994 and 2003 International Adult Literacy Surveys. In cross-sectional data there is a weak negative partial relationship between literacy skills and age. However, this relationship could reflect some combination of age and cohort effects. In order to identify age effects, we use the 1994 and 2003 surveys to create synthetic cohorts. Our analysis shows that the modest negative slope of the literacy-age profile in cross-sectional data arises from offsetting ageing and cohort effects. Individuals from a given birth cohort lose literacy skills after they leave school at a rate greater than indicated by cross-sectional estimates. At the same time, more recent birth cohorts have lower levels of literacy. These results suggest a pervasive tendency for literacy skills to decline over time and that these countries are doing a poorer job of educating successive generations. All three countries show similar patterns of skill loss with age, as well as declining literacy across successive cohorts. The countries differ, however, in the part of the skill distribution where falling skills are most evident. In Canada the cross-cohort declines are especially large at the top of the skill distribution. In Norway declining skills across cohorts are more prevalent at the bottom of the distribution. In the U.S. the decline in literacy skills over time is most pronounced in the middle of the distribution. |
| Keywords: | Human capital, Cognitive skills, Literacy, Ageing |
| JEL: | I20 J14 J24 |
| Date: | 2012–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2012-16&r=age |
| By: | Werner Eichhorst (IZA); Maarten Gerard (IDEA Consult); Michael J. Kendzia (IZA); Christine Mayrhuber (WIFO); Conny Nielsen (NIRAS); Gerhard Rünstler (WIFO); Thomas Url (WIFO) |
| Abstract: | Based on a study conducted for the European Parliament, Bonn 2011 (144 pages) |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izarrs:42&r=age |
| By: | Yeung, Gary Y.C. (VU University Amsterdam); van den Berg, Gerard J. (University of Mannheim); Lindeboom, Maarten (VU University Amsterdam); Portrait, France (VU University Amsterdam) |
| Abstract: | The aim of this study is to assess the effects of economic conditions in early life on cause-specific mortality during adulthood. The analyses are performed on a unique historical sample of 14,520 Dutch individuals born in 1880-1918, who are followed throughout life. The economic conditions in early life are characterized using cyclical variations in annual real per capital Gross Domestic Product during pregnancy and the first year of life. Exposure to recessions during pregnancy and/or the first year of life appears to significantly increase all-cause mortality risks and cancer mortality risks of older males and females. It also significantly increases mortality risks due to cardiovascular diseases and chronic respiratory diseases of older females. The residual life expectancies are up to 4.5 to 8% lower for all-cause mortality and up to 1.5 to 7.8% lower for cause-specific mortality. Our analyses show that cardiovascular and cancer mortality risks are related and that not taking this association into account leads to biased inference. |
| Keywords: | life expectancy, cancer, cardiovascular disease, survival analyses, competing mortality risks, recession |
| JEL: | I12 C41 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6520&r=age |
| By: | Alicia H. Munnell |
| Abstract: | The 2012 Trustees Report shows a significant increase in the program's 75 year deficit from 2.22 percent to 2.67 percent of taxable payroll and an advance in the date of trust fund exhaustion from 2036 to 2033. These changes reflect the slow recovery from the recession and rising disability rolls, among other factors. While the deficit is larger and the date of exhaustion nearer, the story remains the same. The program faces a manageable financing shortfall over the next 75 years, which should be addressed soon to restore confidence in the nation's major retirement program and to give people time to adjust to needed changes. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2012-9&r=age |
| By: | Nicole Fasquelle; Koen Hendrickx; Christophe Joyeux; Igor Lebrun |
| Abstract: | The Federal Planning Bureau has a long tradition in providing long-term projections focused on the evolution of social expenditure within an overall framework of public finance, using the MALTESE system of models. This outlook is based on different scenarios: demographic, socio-economic, macroeconomic and welfare adjustment. The purpose of this publication is to describe the methodology for the construction of the socio-economic and macroeconomic scenarios and to illustrate it by presenting the main results from the 2011 projection for the Annual Report of the Study Group on Ageing. |
| JEL: | E6 H53 H55 J1 J2 |
| Date: | 2012–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:fpb:wpaper:1205&r=age |