nep-age New Economics Papers
on Economics of Ageing
Issue of 2013‒08‒31
fourteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Flexible Pension Take-up in Social Security By Adema, Y.; Bonenkamp, J.; Meijdam, A.C.
  2. Understanding the legal limits on public pension reform By Amy Monahan
  3. Immigrants, Household Production and Women's Retirement By Peri, Giovanni; Romiti, Agnese; Rossi, Mariacristina
  4. Public pension reform By Kent Smetters; Andrew G. Biggs; Amy Monahan; Paul Angelo
  5. Intergenerational Equity and the Gender Gap in Pension Issues By Takayama, Noriyuki
  6. Understanding the valuation of public pension liabilities: Expected cost versus market price By Paul Angelo
  7. Poverty and transitions in health By Adena, Maja; Myck, Michal
  8. Understanding the argument for market valuation of public pension liabilities By Kent Smetters; Andrew G. Biggs
  9. Older Workers and Working Time By Bell, David N.F.; Rutherford, Alasdair C.
  10. Regional age structure, human capital and innovation: Is demographic ageing increasing regional disparities? By Gregory, Terry; Patuelli, Roberto
  11. Mortality hazard rates and life expectancy By Jan S. Cramer; Rob Kaas
  12. How Has the Financial Crisis Affected the Consumption of Retirees? By Richard W. Kopcke; Anthony Webb
  13. Asunnot eläkkeiksi? By Määttänen, Niku; Valkonen, Tarmo
  14. Family Care-giving and Religion: Evidence from Micro-data in the United States By Yoshihiko Kadoya; David Green

  1. By: Adema, Y.; Bonenkamp, J.; Meijdam, A.C. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper studies the redistribution and welfare effects of increasing the flexibility of individual pension take-up. We use an overlapping-generations model with Beveridgean pay-as-you-go pensions, where individuals differ in ability and life span. We find that introducing flexible pension take-up can induce a Pareto improvement when the initial pension scheme contains within-cohort redistribution and induces early retirement. Such a Pareto-improving reform entails the application of uniform actuarial adjustment of pension entitlements based on average life expectancy. Introducing actuarial non-neutrality that stimulates later retirement further improves such a flexibility reform.
    Keywords: redistribution;retirement;flexible pensions.
    JEL: H55 H23 J26
    Date: 2013
  2. By: Amy Monahan
    Abstract: For a wide variety of reasons, many states and municipalities are turning a critical eye toward their employee retirement plans. As various parties debate the merits of different reform measures, it is important to keep in mind that in many states, the law limits potential reform options.
    Keywords: public pension system,pensions,Legal issues
    JEL: A H
    Date: 2013–05
  3. By: Peri, Giovanni (University of California, Davis); Romiti, Agnese (Institute for Employment Research (IAB), Nuremberg); Rossi, Mariacristina (University of Turin)
    Abstract: Women contribute disproportionately to household production, especially in Southern European countries. As a consequence of population aging assistance to elderly parents, rather than child care, has become a prevalent activity in home-production services. Immigrant labor has increasingly become a substitute for women labor in those services. Their presence, therefore, may allow women over 55 to work more outside of the house and retire later. We use a unique database of Italian households to identify the effect of local availability of foreign workers on planned retirement age and labor supply of Italian women. We find that an exogenous increase by one point in the immigrant percentage of the local population increased the planned retirement age of women over 55 by two months relative to similar men. For women with old parents the increase was four months and if they were in low-wealth households the increase was one full year. The same inflow of immigrants also increased the probability that women over 55 work outside the home by nine percentage points, relative to men.
    Keywords: international migration, retirement, labor supply, home production, elderly care
    JEL: J22 J26 F22
    Date: 2013–08
  4. By: Kent Smetters; Andrew G. Biggs (American Enterprise Institute); Amy Monahan; Paul Angelo
    Abstract: Pension underfunding has dominated the media and created significant concerns for state lawmakers as they struggle to bring their fiscal houses in order.
    Keywords: Public Pensions,public pension reform,Public pension
    JEL: A H
    Date: 2013–07
  5. By: Takayama, Noriyuki
    Date: 2013–08
  6. By: Paul Angelo
    Abstract: Current public pension valuation practice provides information on the expected costs associated with funding future benefits, which is relevant to policymakers and taxpayers. This paper argues that current practice is a better approach to measuring pension liability than is a theoretical market-based method. 
    Keywords: public pension system,Public Pension liabilities,market valuation
    JEL: A H
    Date: 2013–05
  7. By: Adena, Maja; Myck, Michal
    Abstract: Using a sample of Europeans aged 50+ from twelve countries in the Survey of Health, Ageing and Retirement in Europe (SHARE) we analyse the role of poor material conditions as a determinant of changes in health over a four-year period. We find that poverty defined with respect to relative incomes has no effect on changes in health. However, broader measures of poor material conditions such as subjective poverty or low relative value of wealth significantly increase the probability of transition to poor health among the healthy and reduce the chance of recovery from poor health over the time interval analysed. In addition to this the subjective measure of poverty has a significant effect on mortality, increasing it by 40.3% among men and by 58.3% among those aged 50-64. Material conditions matter for health among older people. We suggest that if monitoring of poverty in old age and corresponding policy targets are to focus on the relevant measures, they should take into account broader definitions of poverty than those based only on relative incomes. -- Wir untersuchen den Einfluss materieller Umstände auf die Gesundheit der Bevölkerung 50+ in Europa. Dafür analysieren wir die Ergebnisse des Survey of Health, Ageing and Retirement in Europe (SHARE), einer repräsentativen Befragung von Personen im Alter 50+ aus 12 europäischen Ländern über einen Zeitraum von vier Jahren. Unsere Ergebnisse zeigen, dass das Leben in Armut, definiert über das relative Einkommen, keinen Einfluss auf die Gesundheit ausübt. Bei weiter gefassten Definitionen von Armut, wie der subjektiven Armut oder einem niedrigen relativen Vermögen, erhöht sich hingegen die Wahrscheinlichkeit, einen schlechteren Gesundheitszustand zu erreichen, die Genesungswahrscheinlichkeit im analysierten Zeitraum reduziert sich. Des Weiteren ergeben unsere Untersuchungen, dass das subjektive Armutsempfinden die Sterblichkeitsrate signifikant erhöht. Diese Wahrscheinlichkeit ist für Männer um 40,3 Prozent höher, bei den 50- bis 64-Jährigen sogar 58,3 Prozent höher. Solche Ergebnisse weisen darauf hin, dass die materiellen Lebensumstände entscheidend für die Gesundheit der älteren Generation sind. Wir empfehlen, dass sich die Messung von Armut innerhalb der älteren Generation sowie die Zielsetzung in der Politik auf weiter gefasste Armutsdefinitionen stützen sollte als lediglich über das Einkommen definierte.
    Keywords: health transitions,material conditions,poverty,mortality
    JEL: I14 I32 J14
    Date: 2013
  8. By: Kent Smetters; Andrew G. Biggs (American Enterprise Institute)
    Abstract: Those who follow the debate over fair-market valuation of public pension liabilities are aware that economists argue for using lower discount rates to value public pension liabilities but often are unaware of why economists believe what they do. This paper aims to better articulate those beliefs.
    Keywords: public pension system,Public Pension liabilities,pensions,market valuation
    JEL: A H
    Date: 2013–05
  9. By: Bell, David N.F. (University of Stirling); Rutherford, Alasdair C. (University of Stirling)
    Abstract: Contrary to much of the established literature, this paper finds that though many older workers would prefer to reduce their working hours (the overemployed), there is a significant group who would like to work longer hours (the underemployed). And contrary to the assumption that the self-employed are more easily able than employees to select a desired combination of hours and the wage rate, this paper finds that older self-employed workers are more likely to wish to adjust their hours, both upward and downward than are employees. A new index of underemployment is used to show that for the UK, since the onset of the Great Recession, underemployment among older workers has been growing more rapidly than unemployment. Using longitudinal data from the UK Labour Force Survey, the paper investigates the effects of overemployment and underemployment on transitions from employment and self-employment into other labour market states. It confirms that overemployment is a significant predictor of retirement among employees while underemployed employees are less likely to retire.
    Keywords: retirement, working time, overemployment, underemployment, self-employment
    JEL: J01 J11 J21 J22 J23 J38 J64
    Date: 2013–08
  10. By: Gregory, Terry; Patuelli, Roberto
    Abstract: Demographic change is expected to affect labour markets in very different ways on a regional scale. The objective of this paper is to explore the spatio-temporal patterns of recent distributional changes in the workers age structure, innovation output and skill composition for German regions by conducting an Exploratory Space-Time Data Analysis (ESTDA). Beside commonly used tools, we apply newly developed approaches which allow investigating the space-time dynamics of the spatial distributions. We include an analysis of the joint distributional dynamics of the patenting variable with the remaining interest variables. Overall, we find strong clustering tendencies for the demographic variables and innovation that constitute a great divide across German regions. The detected clusters partly evolve over time and suggest a demographic polarization trend among regions that may further reinforce the observed innovation divide in the future. --
    Keywords: innovation,workforce age structure,exploratory space-time data analysis,regional disparities
    JEL: J11 O31 R11 R12 R23
    Date: 2013
  11. By: Jan S. Cramer; Rob Kaas (University of Amsterdam)
    Abstract: We consider the relation between mortality hazards and life expectancy for men and women in the Netherlands and in England. Halving the lifetime mortality hazards increases life expectancy at birth by only 9%.
    Date: 2013–03–01
  12. By: Richard W. Kopcke; Anthony Webb
    Abstract: Despite the recovery of the stock market since the financial crisis, many retirees have seen significant reductions in their wealth relative to pre crisis expectations and substantial declines in investment income due to very low short-term interest rates. What really matters, though, is the impact of the crisis on retirement consumption. This brief updates a recent study which found that the crisis had little effect on the consumption of retirees with either very small or very large amounts of financial assets. In contrast, the broad middle class did suffer a drop in consumption. Some of these households invest mostly in short-term deposits while others invest in a broader range of assets. Some attempt to live off the interest and dividends, while others follow the life-cycle model and draw down their wealth during retirement. The discussion proceeds as follows. The first section describes the impact of the crisis on financial assets. The second section analyzes its impact on retirees’ wealth and income. The third section explains how the crisis affected the consumption of two illustrative types of middle-class retirees. The final section concludes that although life-cycle investors in balanced portfolios experienced relatively modest declines in consumption, the reductions for those attempting to live off the interest on short-term deposits were much greater. The results of the analysis for these specific behaviors, though, represent extremes – most people lie somewhere in between.
    Date: 2013–08
  13. By: Määttänen, Niku; Valkonen, Tarmo
    Abstract: Abstract:Elderly people could markedly increase they standard of living by releasing their housing equity. Purchase of a single-payment life annuity would increase the benefits of this release. The tax treatment of these annuities is, however, very strict in Finland, because both yield and capital are taxed without deductibility of premiums. This study describes the wealth structure of households, assesses the options of taxing single-payment life annuities and analyses how launching of these products would influence tax receipts. We recommend that a rate-of-return allowance should be applied, leaving risk-free interest rate and mortality bonus untaxed. We show that adoption of this tax rule is likely to increase tax revenue, since it would reduce tax-preferred housing.
    Keywords: single-payment life annuity, equity release, taxation
    JEL: H24 G22
    Date: 2013–02–18
  14. By: Yoshihiko Kadoya; David Green
    Abstract: Purpose: Examining the linkage between self-reported ethnicity and the propensity for family-based informal health care, this study considers cultural connections to religion as a possible explanation for ethnic difference. Design and Methods: Nation-wide survey respondents (N = 2,126) were selected on the basis of having a parent requiring long-term care now or in the near future, and weighted according to age, gender, and self-reported Hispanic ethnicity. A probit analysis tested the association of Hispanic ethnicity, as well as several other explanatory variables, with the possibility of the respondent assuming the primary caregiving role for the elderly family member. Results: While there was a significant association between Hispanic ethnicity and family elder care, there was no significant relationship between religion and family elder care. There was additionally no significant association with level of income. Implications: This research reiterates, using recent micro-data, that there is indeed a connection between ethnicity and family elder care. However, we show that religion is not one of the facets underlying such ethnic difference. While we have taken an initial step in quantitatively defining cultural attributes, more research is needed to determine where ethnic differences may originate.
    Date: 2013–08

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