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on Economics of Ageing |
| By: | David E. Bloom (Harvard School of Public Health); Roddy McKinnon (International Social Security Association) |
| Abstract: | Developing countries are increasingly aware of the need to design and implement improvements in public systems for providing pensions to the elderly. Such systems may aim to smooth consumption and thus provide reliable income to older people, reduce poverty among the elderly, insure those no longer working against the risk of running out of funds, and promote equal treatment of men and women in retirement security even when lifetime earnings and projected average life expectancy may differ greatly. The increasing share of the elderly in the population of all countries makes implementation of sustainable pension systems both more urgent and more difficult. Planners must consider numerous options in pension system design and choose the combination of policies that will optimize coverage, benefits, and financing given a country’s demographics, history, practices regarding family support of the elderly, political system, extent of informal labour, and fiscal situation. |
| Keywords: | Public Pensions, Public Systems for Elderly, Income to Elderly |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:gdm:wpaper:10213&r=age |
| By: | Montizaan R.M.; Fouarge D.; Grip A. de (GSBE) |
| Abstract: | This paper investigates the causal effects of the announcement of an increase in the statutory pension age on employee retirement expectations. In June 2010, the Dutch government signed a new pension agreement with the employer and employee organizations that entailed an increase in the statutory pension age from 65 currently to 66 in 2020 for all inhabitants born after 1954. Given the expected increase in average life expectancy, it was also decided that in 2025 the pension age would be further increased to 67 for those born after 1959. This new pension agreement received huge media coverage. Using representative matched administrative and survey data of public sector employees, we find that the proposed policy reform increased the expected retirement age by 3.6 months for employees born between 1954 and 1959 and by 10.8 months for those born after 1959. This increase is reflected in a clear shift in the retirement peak from age 65 to ages 66 and 67 for the respective treated cohorts. Men respond less strongly to the policy reform than women, but within couples we find no evidence that the retirement expectations of one spouse are affected by an increase in the statutory pension age of the other. Furthermore, we show that treatment effects are largely driven by highly educated individuals but are lower for employees whose job involves physically demanding tasks or managerial and supervisory tasks. |
| Keywords: | Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umagsb:2013020&r=age |
| By: | Jingjing Chai; Raimond Maurer; Olivia S. Mitchell; Ralph Rogalla |
| Abstract: | Social Security benefits are currently provided as a lifelong benefit stream, though some workers would be willing to trade a portion of their annuity streams in exchange for a lump sum amount. This paper explores whether allowing people to receive a lump sum as a payment for delayed retirement rather than as an addition to their lifetime Social Security benefits might induce them to work longer. We model the factors that influence how people trade off a Social Security stream for a lump sum, and we also examine the consequences of such tradeoffs for work, retirement, and life cycle wellbeing. Our base case indicates that workers given the chance to receive their delayed retirement credit as a lump sum payment would boost their average retirement age by 1.5-2 years. This will interest policymakers seeking to reform the Social Security system without raising costs or cutting benefits, while enhancing the incentives to delay retirement. |
| JEL: | D11 D6 G11 G22 H55 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19032&r=age |
| By: | Jousten, Alain (University of Liège); Lefèbvre, Mathieu (CREPP, Université de Liège) |
| Abstract: | The paper studies retirement behavior of wage‐earners in Belgium – for the first time using rich survey data to explore retirement incentives as faced by individuals. Specifically, we use SHARE data to estimate a model à la Stock and Wise (1990). Exploring the longitudinal nature of SHARELIFE, we construct measures of financial and non‐financial incentive. Our analysis explicitly takes into account the different take‐up rates of the various early retirement exit paths across time and ages. The results show that financial incentives play a strong role. Health and education also matter, as does regional variation – though the latter in an unexpected way. A set of policy simulations illustrate the scope and also the limits associated with selective parametric reforms. |
| Keywords: | pensions, social security, disability, early retirement, unemployment, labor force participation |
| JEL: | H55 J21 J26 J14 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7387&r=age |
| By: | Ron J.G. van Schie (Erasmus University Rotterdam); Bas Donkers (Erasmus University Rotterdam); Benedict G.C. Dellaert (Erasmus University Rotterdam) |
| Abstract: | Deciding how much to save for retirement is a difficult task that includes many uncertainties. In this paper, we use data from a representative Dutch household panel to study the impact of uncertainty regarding one's savings adequacy on retirement savings contributions and information search processes. We combine ideas from the literature in psychology and economics that provide opposing predictions regarding the impact of uncertainty on retirement savings contributions. Our results indicate that the effect of uncertainty is moderated by two factors: an individual's perceived adequacy of current savings and that individual's financial constraints. In particular, we find that uncertainty increases retirement contributions for those who believe that they save adequately; however, it hinders retirement contributions for those who believe that they save inadequately. This effect of uncertainty is further moderated by the availability of financial means: a reduction in uncertainty results in greater contributions to savings only when financial constraints are absent. We also find that uncertainty has both indirect and direct effects on savings information search. In particular, uncertainty indirectly affects savings information search because it impacts individuals' intentions to save, which consequently forces individuals to engage in purchase-oriented information search; however, uncertainty also has a direct effect because individuals engage in ongoing information search processes to directly reduce uncertainty. The implications of these findings are discussed. |
| Keywords: | uncertainty, savings adequacy, retirement, financial decision making |
| JEL: | D14 D83 D91 M38 |
| Date: | 2012–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012037&r=age |
| By: | Javed I. Ahmed; Brad M. Barber; Terrance Odean |
| Abstract: | Early withdrawals from retirement accounts are a double-edged sword, because withdrawals reduce retirement resources, but they also allow individuals to smooth consumption when they experience demographic and economic shocks. Using tax data, we show that pre-retirement withdrawals increased between 2004 and 2010, especially after 2007, but early withdrawal rates are substantial (relative to new contributions) in all of those years. Early withdrawal events are strongly correlated with shocks to income and marital status, and lower-income taxpayers are more likely to experience the types of shocks associated with early withdrawals and more likely to have a taxable withdrawal when they experience a given shock. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-23&r=age |
| By: | Robert Argento; Victoria L. Bryant; John Sabelhaus |
| Abstract: | Early withdrawals from retirement accounts are a double-edged sword, because withdrawals reduce retirement resources, but they also allow individuals to smooth consumption when they experience demographic and economic shocks. Using tax data, we show that pre-retirement withdrawals increased between 2004 and 2010, especially after 2007, but early withdrawal rates are substantial (relative to new contributions) in all of those years. Early withdrawal events are strongly correlated with shocks to income and marital status, and lower-income taxpayers are more likely to experience the types of shocks associated with early withdrawals and more likely to have a taxable withdrawal when they experience a given shock. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-22&r=age |
| By: | Shinya Sugawara (Faculty of Economics, University of Tokyo); Jiro Nakamura (Advanced Research Institute for the Sciences and Humanities, Nihon University) |
| Abstract: | 　　 　　 This study evaluates the Japanese Long-Term Care Insurance(LTCI) a decade after its launch, focusing on the effects of its 2006 amendment. The radical program led to the emergence of markets for various care services such as home care, daycare and temporary institutional care besides permanent institutional care, which comprises only a formal care sector in many developed countries. We analyze the labor market behavior of women who face requirement for elderly care in their household, under the availability of the various formal care services. Our empirical analysis shows that the 2006 amendment reduced the negative impacts of care requirement both on the rate of female labor force participation and their working hours. However, our results also indicate that regular workers are more likely to utilize formal care, while many non-regular workers provide informal care by themselves. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2013cf888&r=age |
| By: | Dalen, H.P. van; Henkens, K. (Tilburg University, Center for Economic Research) |
| Abstract: | Summary The present paper analyzes the choices faced by European employers when threatened with the prospect of the mass lay-off of their employees as a result of the Great Recession. By means of a representative survey among employers in Italy, Germany, Denmark, Poland, the Netherlands and Sweden in 2009, we show that employers mainly prefer to tackle such threats by offering short-time work, and by early retirement packages to older workers, in conjunction with buy-outs. The latter preference is particularly visible in countries where employers perceive the level of employment protection to be high. The only notable exception is Denmark, where employers prefer to reduce working hours. In general, a sense of generational fairness influences downsizing preferences, with those employers who favor younger workers particularly likely to use early retirement and buy-outs when downsizing, followed by working time reductions. Wage reductions and administrative dismissal are less favored by European employers. In particular, CEOs and owners are more inclined than lower-level managers to cut wages. |
| Keywords: | downsizing;early retirement;fairness;older workers;recession |
| JEL: | D2 J63 J23 J26 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2013026&r=age |
| By: | Belliveau, Stefan |
| Abstract: | This working paper attributes a (potential) path of per-capita US output to demographic effects of the post-war baby boom. To the extent that the baby-boom generation predominates among age cohorts in the US population, a life-cycle model suggests a secular trend in per-capita GDP that is largely congruent with realized (and realizing) potential economic growth. |
| Keywords: | Demography, US, 1945-2046; economic growth; neoclassical growth model;population dynamics |
| JEL: | J11 O41 |
| Date: | 2013–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46912&r=age |
| By: | O'Sullivan, Vincent (Trinity College Dublin); Nolan, Brian (University College Dublin); Barrett, Alan (ESRI, Dublin) |
| Abstract: | Between 2009 and 2011, data were collected under the first wave of The Irish Longitudinal Study on Ageing (TILDA). Over 8,500 people aged 50 and over and living in Ireland were interviewed on a wide range of topics covering socioeconomic and health issues. Our primary goals in this paper are (a) to present details on two of the variables which will be of particular interest to economists, namely income and wealth and (b) to discuss issues in relation to their use, in particular with respect to missing data. We describe how the income and wealth data were collected. We assess the quality of the income data by comparing them to those obtained through the European Union Statistics on Income and Living Conditions (EU-SILC). We find that the distribution of income in the TILDA sample resembles closely that found in a comparable sample from the EU-SILC. We undertake two pieces of analysis, by way of demonstrating potential applications of the data. First, we examine the joint distribution of income and assets and find that there is a small but non-negligible number of people who have low levels of income but high levels of assets and another similarly sized group in the opposite situation. Second, we consider the relationship between income/wealth and life satisfaction, another variable captured in TILDA. We find that income and housing wealth both affect life satisfaction but that the influence of income is much larger. |
| Keywords: | income, wealth, ageing |
| JEL: | D31 J14 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7393&r=age |
| By: | Majumder, Rajarshi |
| Abstract: | Demographic transition creates a small window for countries to leverage their demographic dividend and leapfrog to a higher level of income-employment situation. This opportunity comes in the middle stage of demographic transition when the population pyramid shows signs of maturity and bulges in the middle, indicating a relatively larger share of youth or working age persons in total population, and hence a low dependency ratio. Consequently, countries can engage this human resource to augment its productive capacity. If sensibly utilised, this can raise per capita income level dramatically – pulling up the country to a substantially higher plane of living standards. However, the efforts will fall flat if this group of youth, on which so much depends, are not productive enough to enhance output significantly. Often questions are raised about the employability of the youth because of their inadequate education, training, and market ready skill and if the youth are not absorbed meaningfully into the workforce and are productive enough, this demographic dividend will turn into a demographic nightmare. Huge youth unemployment is the surest way to social tension, unrest, and unlawful activities. Hence to understand India’s readiness in this aspect we must look at the issue of education, skill formation and employment among youth in India. In this overview paper we find that current skill/training situation of youth in India is inadequate. Surplus and shortage coexists in the labour market indicating serious mismatch between supply and demand. There is an urgent need to relook at human resource development pattern in the country. It appears that a socioeconomic crisis is looming large and demographic opportunities will turn to threat unless intervened immediately. |
| Keywords: | Demographic Dividend; Employment; Skill Gap; Labour Demand |
| JEL: | I28 J11 J21 J24 J60 |
| Date: | 2013–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46880&r=age |
| By: | Hans van Kippersluis (Erasmus University Rotterdam); Owen O'Donnell (Erasmus University Rotterdam, University of Macedonia, Thessaloniki, Greece); Eddy van Doorslaer (Erasmus University Rotterdam) |
| Abstract: | While there is no doubt that health is strongly correlated with education, whether schooling exerts a causal impact on health is not yet firmly established. We exploit Dutch compulsory schooling laws in a Regression Discontinuity Design applied to linked data from health surveys, tax files and the mortality register to estimate the causal effect of education on mortality. The reform provides a powerful instrument, significantly raising years of schooling, which, in turn, has a large and significant effect on mortality even in old age. An extra year of schooling is estimated to reduce the probability of dying between ages of 81 and 88 by 2-3 percentage points relative to a baseline of 50 percent. High school graduation is estimated to reduce the probability of dying between the ages of 81 and 88 by a remarkable 17-26 percentage points but this does not appear to be due to any sheepskin effects of finishing high school on mortality beyond that predicted lin early by additional years of schooling. |
| Keywords: | Health, Mortality, Education, Causality, Regression Discontinuity |
| JEL: | D30 D31 I10 I12 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:0000037&r=age |