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on Economics of Ageing |
| By: | Marcella Corsi; Manuela Samek Lodovici |
| Abstract: | Ageing is a distinctly gendered phenomenon, women being increasingly represented in the older cohorts of the European population, due to their longer life expectancy than men. Furthermore, gender differences and inequalities are a fundamental feature of social exclusion and poverty in old age. The twofold discrimination against older women workers based on gender and age stereotypes, combined with their greater vulnerability in the labour market caused by women-specific work trajectories (i.e. career breaks, part-time employment and the gender pay gap) compound with institutional arrangements in producing higher risks of poverty in old age for women than for men. While inadequate or obsolete skills remain the main barriers for older workers to remain in or re-enter the labour market, for women also unpaid work responsibilities (in particular care burdens) constitute severe constraints. Indeed crucial gender issues in old age relate to the role of older women as both major providers and users of care services.This paper discusses gender inequalities in old age and analyses measures implemented in the main policy areas of active ageing (employment; training and life-long learning; volunteer/community work; age-friendly environment and supportive services), in order to identify effective strategies in a gender equality perspective. |
| Date: | 2013–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/137877&r=age |
| By: | Ziegelmeyer, Michael; Nick, Julius (Munich Center for the Economics of Aging (MEA)) |
| 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. |
| JEL: | D12 D91 D14 J26 |
| Date: | 2012–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:12262&r=age |
| By: | Coppola, Michela; Lamla, Bettina (Munich Center for the Economics of Aging (MEA)) |
| Abstract: | There is an increasing interest among social scientists in merging survey data with administrative records from social security institutions. Record linkage represents one way to combine different sources using a unique identifier such as the Social Security number. The informed consent of the respondents however is required, which in turn might induce bias to the consent question and even threaten stability in a panel study. Data from the longitudinal household survey “Saving and old‐age Provision in Germany” (SAVE) are used for analysis of consent rates and patterns. In the latest wave of the study participants have been asked to provide their written consent to link their answers to administrative data from the Federal Employment Agency which also includes information on the respondents’ employers. The combined data set will open new avenues for research on the link between institutions, saving behavior and old‐age provision: The survey data contains information on private pension and non‐pension wealth which will be complemented by complete employment histories. Moreover, from the administrative data entitlements to public pensions can be derived, while an employer survey will shed more light on the diffusion of occupational pensions. SAVE is mainly conducted as a self‐administered paper and pencil (P&P) questionnaire, while existing research is based on personal interviews. Given a response rate of 81% of the participants and a consent rate of 58%, asking for consent appears feasible in a P&P design. There is evidence for mild consent bias. However, considering correlations between giving the consent and a series of socio‐demographic variables, as well as variables capturing respondents’ motivation and willingness can explain variation in the consent only to a small extent. We conclude that most of the variation is random. |
| Date: | 2012–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:12258&r=age |
| By: | Aylit Tina Romm |
| Abstract: | In this paper we demonstrate that the magnitude of the reaction of saving behavior to a change in the anticipated retirement date is largely determined by the degree to which utility is additively separable in consumption and leisure. We show that the relative decrease in saving in response to a later anticipated retirement date is larger when preferences are non-separable in consumption and leisure, and the cross-derivative of the utility function is negative, than when preferences are separable. In particular, based on our simulations, the short term decrease in aggregate pre-retirement saving in response to a later anticipated retirement date may be up to 61.5% in the non-separable case as against 31% in the separable case. In the long-term , the decrease in pre-retirement saving would be as much as 28.5% in the non-separable case, as against 16.5% in the separable case. |
| Keywords: | Non-separable preferences; retirement date; saving |
| JEL: | D91 J26 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:323&r=age |
| By: | Marco Angrisani (RAND Corporation); Michael D. Hurd (RAND Corporation); Erik Meijer (RAND Corporation) |
| Abstract: | The rapid transition from defined benefit (DB) pension plans to defined contribution (DC) plans has a potential benefit of offering pension holders greater control over how their pension accumulations are invested. If pension holders are willing to take some risk, investments in the stock market could increase their economic preparation for retirement, and, indeed, economic theory as well as the typical advice of financial advisors calls for stock market investments. Yet, the rate of stock holding is much below what theory suggests it should be, undoing any benefit associated with the greater control coming from DC plans. The leading explanations for this under-investing include excessive risk aversion, costs of entry, and misperceptions about possible returns in the stock market. We show that excessive risk aversion is not able to account for the low fraction of stock holding. However, a model with heterogeneous subjective expectations about stock market returns is able to account for low stock market participation, and tracks the share of risky assets conditional on participation reasonably well. Based on the model with subjective expectations, we estimate a welfare loss of up to 12% compared to investment under rational expectations, if actual returns follow the same distribution as in the past 50 years. The policy implication is that there is considerable scope for welfare improvement as a result of consumer education regarding stock market returns. However, the welfare loss is much smaller if individuals are not very risk averse or if actual returns follow the same distribution as in the past 10 years. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp274&r=age |
| By: | Alicia H. Munnell; Rebecca Cannon Fraenkel |
| Abstract: | The 2008 financial crisis sharply reduced the assets and funded levels in state and local pension plans. he drop in funding means that state and local governments have to raise additional revenue to fill the gap. At the same time, the ensuing recession eroded state and local revenues and increased the demand for public services. In response, governments have looked to cut benefits to their workers in order to reduce pension costs. Since, in many cases, state laws prevent any reduction in benefits for current employees, much of the cost-cutting activity has been aimed at new employees. As discussed below, studies have shown that total compensation is roughly equal in the public and private sectors, so a reduction in pension benefits will make total compensation lower in the public sector than in the private sector. Economic theory suggests that lower compensation will reduce the quality of workers attracted to the public sector. To assess the impact that recent cuts to pension benefits may have on the public sector workforce, this brief examines how total compensation differences within the public sector affect the quality of newly hired teachers. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ibslp28&r=age |
| By: | Ricky Kanabar; Peter Simmons |
| Abstract: | US males labour force behaviour shows lifecycle effects. We develop a lifecycle model of individual labour supply, with a single financial asset and non labour income. With widely used preferences, we derive the analytical form of the value function and optimal labour participation for any period, t. Consumption and savings switches its form as participation changes. A spell of part time work has strong implications for earlier decisions on participation, consumption, savings and the marginal value of leisure and wealth. We apply our framework to explain the increasing prevalence of non standard retirement noted in the literature. |
| Keywords: | Lifecycle, Labour supply decision, Retirement, Unretirement |
| JEL: | J22 J26 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:13/01&r=age |
| By: | Andrew Beauchamp (Boston College); Mathis Wagner (Boston College) |
| Abstract: | Despite facing some of the same challenges as private insurance markets, little is known about the role of adverse selection in social insurance programs. This paper studies adverse selection in Social Security retirement choices using data from the Health and Retirement Study. We find robust evidence that people who live longer choose larger annuities by delaying the age they first claim benefits, a form of adverse selection. To quantify welfare consequences we develop and estimate a simple model of annuity choice. We exploit variation in longevity, the underlying source of private information, to identify the key structural parameters: the coefficient of relative risk aversion and the discount rate. We estimate that adverse selection reduces social welfare by 2.3-3.5 percent, and increases the costs to the Social Security Trust Fund by 2.1-2.5 percent, relative to the first best allocation. Counterfactual simulations suggest program adjustments could generate both economically significant decreases in costs and small increases in social welfare. We estimate an optimal non-linear accrual rate which would result in welfare gains of 1.4 percent, and cost reductions of 6.1 percent of current program costs. |
| Keywords: | Adverse Selection, Social Security, Optimal Policy |
| JEL: | J26 D82 |
| Date: | 2012–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:818&r=age |
| By: | Dirk Broeders; Paul Hilbers; David Rijsbergen |
| Abstract: | This paper identifies the key factors driving indexation in turbulent economic times within defined benefit plans using a unique panel dataset of 166 Dutch pension funds from 2007 to 2010. Key drivers of indexation are the funding ratio, inflation and real wage growth. The type of pension fund and the interest rate exposure are also statistically significant, although the latter effect is nonlinear. The asset allocation has no significant effect on the level of provided indexation as this is already captured by the funding ratio. We also examine the relation between policy ladders and the actual level of provided indexation. This study finds that a policy ladder with an upper limit equal to a 100 percent real funding ratio is able to predict the actual level of indexation more accurately than a ladder with an upper limit based on a pension fund’s required funding ratio. |
| Keywords: | Indexation; policy ladders; defined benefit plans |
| JEL: | G12 G13 G23 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:368&r=age |
| By: | Bryan Campbell; Laurence Allaire; Vinh Nguyen; Paul Gauthier; Richard Guay; Michel Magnan |
| Abstract: | <b>Contexte : Un nouveau système d’épargne, les RVER</b> <p> Ce rapport présente nos résultats de recherche dans le cadre du second mandat d’une série de projets sur l’épargne-retraite et les fonds de pension. L’objectif du premier rapport était d’examiner la protection offerte aux Québécoises et Québécois en matière de régime de retraite dans le cas des employés du secteur privé dont les revenus se situent surtout entre 40 000 $ et 100 000 $. On compte 2,7 millions de Québécois dans le secteur privé qui ne travaillent pas à leur propre compte. De ce nombre, seulement 25 % environ sont protégés par des régimes de retraite d’employeurs pour compléter leur revenu provenant du Régime de rentes du Québec (RRQ) et de la Sécurité de la Vieillesse (SV/SRG) fédérale, au moment de la retraite. Les membres de ce groupe, lors de la transition vers la retraite, sont particulièrement vulnérables à une diminution marquée de leur niveau de vie s’ils n’ont pas épargné suffisamment en vue de cette retraite, ou acquis des actifs pouvant servir à la soutenir. Notre premier mandat consistait à examiner leurs perspectives en ce qui a trait à leur préparation à la retraite ainsi qu’à proposer des changements lorsqu’il est justifié de le faire. <p> Ce précédent mandat s’est conclu par un rapport regroupant une variété de mécanismes voués à encourager l’épargne chez ce groupe de travailleurs, et ce, sous le concept général de « Pensions 4-2 ». Les éléments principaux de ce rapport incluent : (1) tous les travailleurs sans régime d’employeur sont automatiquement inscrits dans un régime d’épargne avec un taux de cotisation par défaut que nous suggérons à un niveau de 4 %; (2) cette cotisation est accompagnée d’une contribution de l’employeur de 0,5 % pour chaque 1 % épargné par l’employé, jusqu’à un maximum de 2 %; et, (3) les cotisations sont versées dans un compte d’épargne individuel au nom de l’employé et sont transférables lorsque l’employé change d’employeur. <p> La structure d’épargne RVER, annoncée par le gouvernement du Québec dans le budget du printemps 2012, et le contenu de ce premier rapport sont généralement en concordance; les points (1) et (3) y sont incorporés, alors que la proposition (2) est facultative pour l’employeur. |
| Date: | 2013–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirpro:2013rp-02&r=age |