|
on Economics of Ageing |
| By: | Gary Burtless |
| Abstract: | The labor force participation of men age 60-74 has increased in recent years. Since reaching a post-World War-II low point in 1993, the share of such older men either working or looking for work jumped about 11 percentage points, from 33 percent in 1993 to 44 percent in 2010. The increase came at a time when changes in the retirement income system provided incentives for career workers to remain in the labor force longer. The share of earnings that Social Security replaced at any given age was falling due to the rise in the program’s Full Retirement Age. Workers could partly or fully offset the decline by retiring later. Workers were also becoming increasingly dependent on 401(k)s for their workplace retirement savings. Unlike traditional (defined-benefit) pension plans, 401(k) plans do not offer strong financial incentives to retire earlier rather than later. Working longer provides more time to save and earn investment income and shortens the time in retirement that must be financed with 401(k) savings. The rise in labor force participation can thus be seen as a response to changes in the retirement income system that reduce benefits available at any given age and reward working longer. The question addressed in this brief is the extent to which the increased educational attainment of older men helps explain their increased participation in the labor force.Educational attainment is a key determinant of worker productivity. Better educated workers are paid more and have more employment opportunities. At older ages they also tend to have better health. An increase in the educational attainment of older men can thus be expected to increase the willingness and ability of older men to work longer. The discussion proceeds as follows. The first section presents data on the rising educational attainment of older men and the closing of the educational gap between older and prime-age men. The second section examines the wages earned by older and younger workers to see whether these educational gains made older men more attractive to employers. The third section reports the results of an analysis assessing the extent to which the rise in educational attainment can explain the rise in participation. The final section concludes that the rise in educational attainment is a significant factor that makes older men more willing and able to remain in the labor force. But the gains in older men’s schooling attainment, both absolutely and relative to attainment of younger workers, are slowing. Therefore, the gains we have seen in labor force participation among older men will probably slow in the near future. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2013-13&r=age |
| By: | Barrett, Alan (ESRI, Dublin); Mosca, Irene (Trinity College Dublin); Whelan, Brendan J. (Trinity College Dublin) |
| Abstract: | Governments are increasingly concerned about the capacity of pensions systems to meet demands in the coming years. According to the OECD, one part of the policy response in many countries will be greater private provision on the part of individuals through occupational and other pension arrangements. If such a strategy is to work, it requires that individuals are well-informed about pensions. However, there are many reasons to believe that individuals may not be well-informed due to the complexity of pensions systems and degrees of myopia. In this paper, we assess levels of knowledge of pensions using a representative sample of older Irish people. Looking at people who are enrolled in pension schemes, we find that two thirds of these people do not know what amount will be paid out on retirement and/or whether the payments will be in the form of lump-sums, monthly payments or both. Women are more likely not to know, as are people with lower levels of education. While one policy conclusion might be to direct pensions-related information at certain groups, another approach might be to extend the mandatory elements in pension systems such as contribution rates. |
| Keywords: | pensions, knowledge, older workers |
| JEL: | I38 J14 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7596&r=age |
| By: | d'Albis, Hippolyte; Collard, Fabrice |
| Abstract: | This paper proposes the use of optimal grouping methods for determining the various age groups within a population. The cuto� ages for these groups, such as the age from which an individual is considered to be an older person, are then endogenous variables that depend on the entire population age distribution at any given moment. This method is applied to the age distributions of some industrialized countries, for which cuto� ages as well as the main indicators of aging are calculated over the last 50 years. |
| Keywords: | Population Aging, Age Distributions, Aging Indexes, Optimal Grouping, Old Age, Demographic Measures. |
| JEL: | J11 |
| Date: | 2013–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49972&r=age |
| By: | Maja Adena; Michal Myck |
| 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. |
| Keywords: | health transitions, material conditions, poverty, mortality |
| JEL: | I14 I32 J14 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1319&r=age |
| By: | Martin Huber; Michael Lechner; Conny Wunsch (University of Basel) |
| Abstract: | In this paper, we assess the impact of firms introducing part-time work schemes for gradual labour market exit of elderly workers on their employees’ labour market outcomes. The analysis is based on unique linked employer-employee data that combine high-quality survey and administrative data. Our results suggest that partial or gradual retirement options offered by firms are an important tool to alleviate the negative effects of low labour market attachment of elderly workers in ageing societies. |
| Keywords: | part-time work, elderly employees, treatment effects, matching |
| JEL: | J14 J26 C21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2013/12&r=age |
| By: | Bernhard Hammer; Alexia Prskawetz; Inga Freund |
| Abstract: | We investigate the reallocation of resources across age and gender in a comparative European setting. Our analysis is based on concepts and data from the National Transfer Accounts (NTA) project, as well as on data from income and time use surveys. We introduce the aggregate NTA life cycle deficit as a concept of an economic dependency ratio. This dependency measure allows for flexible age limits and age-specific levels of economic dependency. We then move beyond the current NTA methodology and study gender differences in the generation of income and extend our analysis by unpaid household work. We find large cross-country differences in the age- and gender-specific levels and type of production activities and consequently in the organisation of the resource reallocation across age. Our results clearly indicate that a reform of the welfare system needs to take into account not only public transfers but also private transfers, in particular the services produced within the households for own consumption (e.g. childcare, cooking, cleaning...). |
| Keywords: | Ageing, challenges for welfare system, demographic change, welfare state |
| JEL: | I38 J10 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:feu:wfewop:y:2013:m:9:d:0:i:13&r=age |
| By: | Javier Olivera (UCD Geary Institute, PEARL Institute for Research on Social Inequality, University of Luxembourg); Blanca Zuluaga (Department of Economics, Icesi University) |
| Abstract: | The aim of this paper is to study the ex-ante effects of the implementation of a Non Contributory Pension (NCP) program in Colombia and Peru. Relying on household survey data, we simulate the potential impact of the transfer on poverty, inequality, fiscal cost, and the probability of affiliation to the contributory pension system. This last effect is the most direct behavioural effect one can expect from the implementation of a NCP scheme. For the behavioural response we estimate a Nested Logit Model. Our results show that a NCP in Colombia and Peru contributes to the reduction of poverty and inequality among the elderly, particularly in rural areas at affordable fiscal costs. Furthermore, there is not a large impact on the probability of affiliation to contributory pensions when the program is targeted to the poor (and extreme poor), with the exception of Peruvian women. |
| Keywords: | non-contributory pensions, social security, old-age, poverty |
| JEL: | D30 I32 I38 J14 J26 |
| Date: | 2013–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201314&r=age |
| By: | Il Houng Lee; Xu Qingjun; Murtaza H. Syed |
| Abstract: | In coming decades, China will undergo a notable demographic transformation, with its old-age dependency ratio doubling to 24 percent by 2030 and rising even more precipitously thereafter. This paper uses the permanent income hypothesis to reassess national savings behavior, with greater prominence and more careful consideration given to the role played by changing demography. We use a forward-looking and dynamic approach that considers the entire population distribution. We find that this not only holds up well empirically but may also be superior to the static dependency ratios typically employed in the literature. Going further, we simulate global savings behavior based on our framework and find that China’s demographics should have induced a negative current account in the 2000s and a positive one in the 2010s given the rising share of prime savers, only turning negative around 2045. The opposite is true for the United States and Western Europe. The observed divergence in current account outcomes from the simulated path appears to have been partly policy induced. Over the next couple of decades, individual countries’ convergence toward the simulated savings pattern will be influenced by their past divergences and future policy choices. Other implications arising from China’s demography, including the growth model, the pension system, the labor market, and the public finances are also briefly reviewed. |
| Keywords: | Savings;China;Current account;Aging;Labor markets;Pensions;Public finance;China, Aging, Demographics, Savings, Current Account, Global Imbalances |
| Date: | 2013–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:13/82&r=age |
| By: | Raquel Fonseca; Pierre-Carl Michaud; Arie Kapteyn; Titus Galama |
| Abstract: | We estimate a stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and longevity in the U.S. over the period 1965-2005. We estimate that technological change and the increase in the generosity of health insurance on their own may explain 36% of the rise in health spending (technology 30% and insurance 6%), while income explains only 4% and other health trends 0.5%. By simultaneously occurring over this period, these changes may have led to complementarity effects which we find to explain an additional 57% increase in health spending. The estimates suggest that the elasticity of health spending with respect to changes in both income and insurance is larger with co-occurring improvements in technology. Technological change, taking the form of increased health care productivity at an annual rate of 1.3%, explains almost all of the rise in life expectancy at age 25 over this period while changes in insurance and income together explain less than 10%. Welfare gains are substantial and most of the gain appears to be due to technological change. |
| Keywords: | Demand for health, life cycle, health spending, technology, insurance, longevity |
| JEL: | J01 I1 O33 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1326&r=age |
| By: | Marcos Antonio Coutinho da Silveira |
| Abstract: | O trabalho investiga a eficiência alocativa da política de investimentos dos fundos previdenciários instituídos no Regime Próprio de Previdência Social (RPPS) dos Entes Federativos brasileiros. Para tanto, desenvolve-se modelo de alocação estratégica de portfólio para um fundo previdenciário cujos recursos financiam um plano do tipo benefício definido. Este modelo permite derivar a alocação ótima entre as principais classes de ativos financeiros, com base na qual é possível avaliar a eficiência dos investimentos efetuados pelos gestores dos fundos previdenciários, bem como dos limites que a legislação previdenciária impõe sobre sua política de investimentos. Uma vez que os fundos previdenciários são tradicionais investidores de longo prazo, a análise enfatiza o valor de cada classe de ativos como hedge intertemporal para flutuações das oportunidades futuras de investimento. The paper investigates the allocative efficiency of the investment policy of pension funds established within the Welfare and Social Security System of the Brazilian federal entities. For that, it develops a model of strategic asset allocation for a pension fund whose resources fund a defined-benefit plan. This model allows to derive the optimal allocation between the main classes of financial assets, based on which it is possible to evaluate the efficiency of the investments by pension fund managers, as well as of the limits that the social security legislation imposes on their investment policies. Since pension funds are traditional long-term investors, the analysis emphasizes the value of each class of assets as an intertemporal hedge for fluctuations in future investment opportunities. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:ipe:ipetds:1862&r=age |
| By: | Hudson, Eibhlin (Trinity College Dublin); Barrett, Alan (ESRI, Dublin) |
| Abstract: | Research has shown that employment status, such as being unemployed or retired, can be related to well-being. In addition, the direction and size of these relationships can be influenced by the employment status of one's peer group. For example, it has been shown that the well-being of the unemployed tends to be higher for those living in high-unemployment areas compared to the unemployed living in low-unemployment areas. In this paper, we explore whether such employment peer effects impact upon the well-being of older workers. This is an important issue in the context of promoting longer working lives. If the well-being of older people in employment is lowered by low employment levels in their peer group, then sustaining high employment among older workers will be more difficult. We use data from the Irish Longitudinal Study on Ageing (TILDA) which is a nationally representative sample of people aged fifty and over and living in Ireland, collected between 2009 and 2011. Employment peer effects are proxied using the peer group non-employment rate where a peer is defined as someone in the same age-group and region and of the same gender. We find that for the employed, an increase in peer non-employment is associated with an increase in reported depressive symptoms, whereas for those not employed such an increase is associated with a decrease in reported depressive symptoms. However, these findings hold mainly for men. |
| Keywords: | peer groups, well-being, older adults |
| JEL: | I10 J26 C21 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7586&r=age |