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on Economics of Ageing |
| By: | Hernaes, Erik (Ragnar Frisch Centre for Economic Research); Markussen, Simen (Ragnar Frisch Centre for Economic Research); Piggott, John (ARC Centre of Excellence in Population Ageing Research); Vestad, Ola (Ragnar Frisch Centre for Economic Research) |
| Abstract: | This paper studies the relationship between retirement and mortality, using a unique administrative data set covering the full population of Norway. We make use of a series of retirement policy changes in Norway, which reduced the retirement age for a group of workers but not for others. By employing a difference-in-differences framework based on monthly birth cohort and treatment group status we first establish that the early retirement program significantly reduced the retirement age – this remains true when we account for program substitution, for example into the disability pension. Using instrumental variables estimation we find that retirement age has no effect on mortality. |
| Keywords: | Retirement age; Mortality; Instrumental variables; Policy evaluation |
| JEL: | H55 I10 J11 J26 |
| Date: | 2012–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2012_019&r=age |
| By: | Miguel Sánchez Romero (Max Planck Institute for Demographic Research, Rostock, Germany); Joze Sambt; Alexia Prskawetz (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | This paper investigates the role of recent pension reforms for the development of the social security system and economic growth in Austria. We use a computable general equilibrium model that is built up of overlapping generations that differ by their household structure, longevity, educational attainment, and capital accumulation. Each household optimally decides over its consumption paths, work effort, and retirement age according to the life-cycle theory of labor, while they face survival risk. We find that the pension reforms implemented from 2000 to 2004, although in the correct direction, are not sufficient to solve the labor market distortion caused by the Austrian PAYG pension system. Using alternative policy options, our simulations indicate that a change to a notional defined contribution system and an increase in the educational distribution of the work force would increase the incentive for later retirement ages and thereby increase labor supply and economic growth. |
| Keywords: | Austria, ageing, retirement, social security |
| JEL: | J1 Z0 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2012-026&r=age |
| By: | Bali, Azad Singh (Asian Development Bank Institute); Asher, Mukul G. (Asian Development Bank Institute) |
| Abstract: | Rapid ageing of the population globally represents an unprecedented historical trend. As pension and healthcare costs are positively correlated with rising incomes, ageing, urbanization, and a shift from communicable to life-style diseases, managing these costs is a major challenge. There are many linkages between healthcare and pension arrangements—in terms of costs, exposure to risks, and as they jointly impact on crucial policy decisions. This paper discusses the rationale for coordination between various programs to better manage the cost of ageing. The current difficult macroeconomic environment, including fiscal stringency conditions, strengthens the case for such coordination. |
| Keywords: | population ageing; pension policies; healthcare policies; urbanization |
| JEL: | J10 J40 |
| Date: | 2012–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0374&r=age |
| By: | Michael Ziegelmeyer; Julius Nick |
| Abstract: | Financing pensions in the EU is a challenge. Many EU countries introduced private pension schemes to compensate declining public pension levels due to reforms made necessary by demographic change. In 2001, Germany introduced the Riester pension. Ten years after introduction the prevalence rate of this voluntary private pension scheme approximates 37%. However, numerous criticisms raise doubts that the market for Riester products is transparent. Using the 2010 German SAVE survey, this paper investigates for the first time terminated and dormant Riester contracts on a household level. Respectively 14.5% and 12.5% of households who own or have owned a Riester contract terminated it or stopped paying contributions. We find that around 45% of terminated or dormant Riester contracts are caused at least partly by product-related reasons, which is significantly higher than for endowment life insurance contracts. Uptake of a new contract after a termination is more likely if termination is productrelated. Nevertheless, after a termination 73% of households do not sign a new contract, which can have serious long-term consequences for old-age income. Households with low income, low financial wealth or low pension literacy are more likely to have terminated or dormant contracts. Low income and low financial wealth households also have the lowest prevalence rate of Riester contracts and are at higher risk of old-age poverty. |
| Keywords: | private pension, Riester, termination, financial literacy, SAVE |
| JEL: | D12 D91 D14 J26 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:bcl:bclwop:bclwp074&r=age |
| By: | Alicia H. Munnell |
| Abstract: | People often ask how baby boomers compare with their parents in terms of being prepared for retirement. The easiest way to answer that question is to look at the ratio of wealth to income from the 2010 Survey of Consumer Finances (SCF), the Federal Reserve’s comprehensive triennial survey of household wealth in the United States, and compare it to earlier surveys. The notion is that the wealth-to-income ratio is a good proxy for the extent to which people can replace their pre-retirement earnings in retirement. This brief proceeds as follows. The first section shows the wealth-to-income ratio for each SCF survey from 1983 through 2010. The ratio in 2010, in the wake of the financial crisis and ensuing recession, was way below that for all the other survey years. The second section identifies four reasons why people need a higher wealth-to-income ratio to be as well off as their parents – increased life expectancy, the shift to 401(k)s, higher health care costs, and lower real interest rates. The third section concludes that the constant ratio of wealth to income between 1983 and 2007 should never have been a source of comfort. The world has changed in important ways that all require more wealth to sustain living standards in retirement. Thus, the sharp decline in the wealth-toincome ratio reported in the 2010 SCF signals even more serious problems for future retirees. |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2012-15&r=age |
| By: | Yoshihiko Kadoya; Ting Yin |
| Abstract: | Chinese parents prefer to have sons as they depend on their sons for support in old age, according to most of the literature. This paper uses the Preference Parameters Study, which randomly interviewed individuals in six major cities in China in 2011, to present empirical evidence about the possible cause of the problematic gender imbalance at birth in China. From the dataset, this paper compares sons' and daughters' commitment to parental care from a selection of respondents who were married, aged 20-70, had at least one living parent, and had no missing answers to the interview questions. The results indicate that Chinese sons (and their wives) are more likely, compared to daughters (and their husbands), to be primary caregivers for parents. Nonetheless, parents' dependency on their children would not necessarily decrease with social security, although children with highly educated spouses appear to present an exception. The current study supports the initial claim found in literature; however, the solution to the gender imbalance at birth in China may not be the development of a social security system. |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0855&r=age |
| By: | Bettina Lamla |
| Abstract: | In order to encourage people to take out voluntary private pensions to supplement decreasing statutory provisions Germany introduced the so-called Riester pensions. The complex design of the new product might have created entry barriers into the market helping to explain the slow adaption path in the eligible population until today. Existing empirical evidence has not properly taken into account the search and decision costs related to Riester pensions. I use information on family background in order to account for the predisposed ability to manage relevant information as well as to capture the impact of information sharing within families. I conclude that parental erudition as well as experience in financial matters are determinants of their children’s preferences and ability in financial decision making, however, omission does not seem to lead to misleading results on other coefficients. Contemporaneous as well as sequential correlations in Riester ownership between siblings are pronounced. While the former might be due to shared preferences, I take the latter as evidence for information sharing. Positive externalities help to overcome entry barriers in the Riester market by dispersing information. The family as a source of information becomes less important with time as the number of Riester owners in other social circles grows. Once a critical mass has been reached positive spillovers create a social multiplier which should result in dynamic demand for Riester contracts. Indeed official statistics exhibit increasing uptake rates among low income individuals for whom initial entry barriers were comparably high. |
| JEL: | D83 D91 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp466&r=age |