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on Economics of Ageing |
| By: | von Werder, Marten; Thum, Anna-Elisabeth |
| Abstract: | This report reviews national and private initiatives to allow the elderly to continue their participation in the Finnish labour market and provides an analysis of the labour market and living conditions of seniors. We are interested in how those over 50 can be engaged in various forms of employment and lifelong learning. We find strong evidence that Finland generally provides good institutional conditions for active ageing. The quick and early ageing process was tackled by the fundamental pension reform that already prolonged retirement substantially and will probably facilitate later retirement as the attitudes concerning retirement change. On the other hand, Finland still seems to lag behind the other Nordic welfare states, has considerable problems in providing the same health conditions to low educated people in physically demanding occupations and could - – with respect to family pension in particular – invest further efforts in reforming the pension system. While many of the reforms Finland has conducted seem to be favourable and transferable to other European countries that still face the steepest phases of ageing in their societies, a reluctance towards changing attitudes that we observe in Finland, shows that organizing active ageing is a long-term project. |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:8625&r=age |
| By: | Contreras, Nicolas; Martellucci, Elisa; Thum, Anna-Elisabeth |
| Abstract: | This report aims at understanding how persons aged 50 years and older are and can be integrated into the working society in Belgium. We are interested in how people in this age group can be induced to engage in various forms of employment and lifelong learning. Based on secondary literature, descriptive databases as well as interviews with experts and focus groups, we find that the discussion on active ageing in Belgium is well advanced with numerous contributions by academics, stakeholders, social partners, the public administration and interest groups. The wish to retire at 60 is widely shared, but at the same time the majority of Belgium’s elderly are able and would be willing to work under specific conditions. Therefore, we recommend that Belgium should invest in more flexible systems including a revision of the tax scheme, such as the part-time retirement system proposed by the insurance company Delta Lloyd. An equally relevant recommendation would be to ensure that public employment agencies, employers and agencies that provide training encourage all workers to work and learn regardless of their age. |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:8623&r=age |
| By: | Friedrich Breyer; Normann Lorenz; Thomas Niebel |
| Abstract: | It is still an open question whether increasing life expectancy as such is causing higher health care expenditures (HCE). According to the “red-herring”-hypothesis, the positive correlation between age and HCE is exclusively due to the fact that mortality rises with age and a large share of HCE is caused by proximity to death. As a consequence, rising longevity – through falling mortality rates – may even reduce HCE. However, a weakness of previous empirical studies is that they use cross-sectional evidence to make inferences on a development over time. In this paper we try to isolate the impact of rising longevity on the trend of HCE over time by using data for a pseudo-panel of German sickness fund members over the period 1997-2009. Using dynamic panel data models, we find that age, mortality rate and five-year survival rates have a positive impact on per-capita HCE. Our explanation for the last finding is that physicians treat patients more aggressively if they think the result will pay off for a longer time span, which we call “Eubie Blake effect”. A simulation on the basis of an official population forecast for Germany is used to isolate the effect of demographic ageing on real per-capita HCE over the next decades. |
| Keywords: | health care expenditures, ageing, longevity, 5-year survival rate |
| JEL: | H51 J11 I19 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:trr:wpaper:201201&r=age |
| By: | Nick Draper; André Nibbelink; Johannes Uhde |
| Abstract: | The ageing of the Dutch population, resulting in an increase in the number of retirees relative to the working population, has induced a debate about the sustainability of the Dutch first pillar pension scheme (AOW). The system is financed as a pay-as-you-go system. This paper explores possible alternatives for the AOW. It does so by setting up a stochastic partial equilibrium model to study intragenerational insurance, which inlcudes longevity and productivity risk. The model shows the welfare, labour-market, saving and unintended-bequest effects of a shift from a Beveridge towards a Bismarck system in which pension rights depend on labour-market history. The main conclusion is that a shift of the first pillar pensions from a Beveridge towards a Bismarck system is not necessarily welfare improving from an ex-ante insurance perspective, i.e. before the veil of ignorance is lifted. Moreover, a means test of the first pillar against wealth income, which implies a lower AOW when an individual has wealth income and a lower pension premium for everyone, does not improve welfare in the setting of the model considered in this paper. |
| JEL: | D81 D91 H55 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:259&r=age |
| By: | Alan L. Gustman; Thomas L. Steinmeier; Nahid Tabatabai |
| Abstract: | This paper uses data from the Health and Retirement Study to investigate the effects of Social Security’s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) provision on Social Security benefits received by individuals and households. WEP reduces the benefits of individuals who worked in jobs covered by Social Security and also worked in uncovered jobs where a pension was earned. WEP also reduces spouse benefits. GPO reduces spouse and survivor benefits for persons who worked in uncovered government employment where they also earned a pension. Unlike previous studies, we take explicit account of pensions earned on jobs not covered by Social Security, a key determinant of the size of WEP and GPO adjustments. Also unlike previous studies, we focus on the household. This allows us to incorporate the full effects of WEP and GPO on spouse and survivor benefits, and to evaluate the effects of WEP and GPO on the assets accumulated by affected families. Among our findings: About 3.5 percent of households are subject to either WEP or to GPO. The present value of their Social Security benefits is reduced by roughly one fifth. This amounts to five to six percent of the total wealth they accumulate before retirement. Households affected by both WEP and GPO lose about one third of their benefit. Limiting the reduction in the Social Security benefit to half the size of the pension from uncovered employment reduces the penalty from WEP for members of the original HRS cohort by about 60 percent. |
| JEL: | D31 E21 H55 I3 J14 J26 J32 J45 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19724&r=age |
| By: | Alicia H. Munnell; Anthony Webb; Rebecca Cannon Fraenkel |
| Abstract: | The National Retirement Risk Index (NRRI) measures the share of working-age American households “at risk” of being unable to maintain their pre-retirement standard of living in retirement. The Index is calculated by comparing households’ projected replacement rates – retirement income as a percent of pre-retirement income – with target replacement rates that would allow them to maintain their standard of living. These calculations are based on the Federal Reserve’s Survey of Consumer Finances, a triennial survey of a nationally representative sample of U.S. households. The most recent survey is 2010. (2013 is currently in the field.) As of 2010, the NRRI showed that, even if households worked to age 65 and annuitized all their financial assets (including the receipts from reverse mortgages on their homes), 53 percent of American households were at risk. Since 2010, in inflation-adjusted terms, the stock market has increased by 45 percent and house prices have risen by 6 percent. The question examined here is how the 2010 picture would have looked if equities and housing were at 2013 levels. The discussion proceeds as follows. The first section briefly describes the nuts and bolts of the NRRI and the nature of the current experiment. The second section presents the results. The key finding is that improving asset markets have only slightly lowered retirement risk because the increases in house prices have been modest, and the more robust growth in stocks mainly benefits the top third of households. The third section explains why, even with the market rebounds, the picture still looks worse than 2007. The final section concludes even substantial increases in asset values have only a modest effect on the NRRI. Half of American households remain at risk, and the only real solutions are to save more and/or work longer. |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2013-17&r=age |
| By: | Monika Bütler; Kim Peijnenburg (Department of Finance, Tilburg University, The Netherlands); Stefan Staubli |
| Abstract: | We analyze the effect of means-tested benefits on annuitization decisions. Most industrialized countries provide a subsistence level consumption floor in old age, usually in the form of means-tested benefits. The availability of such means-tested payments creates an incentive to cash out (occupational) pension wealth for low and middle income earners, instead of taking the annuity. Agents trade-off the advantages from annuitization, receiving the wealth-enhancing mortality credit, to the disadvantages, giving up “free” wealth in the form of means-tested supplemental benefits. We find that the availability of means-tested benefits can reduce the desired annuitization levels substantially. Using individual level data, we show that the model’s predicted annuitization rates as a function of the level of pension wealth are roughly consistent with the cash-out patterns of occupational pension wealth observed in Switzerland. |
| Keywords: | means-tested benefits, occupational pension, annuity, life-cycle model |
| JEL: | D81 D91 G23 J26 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2013_11&r=age |
| By: | Steven A. Sass |
| Abstract: | Investing Social Security Trust Fund assets in equities has long been a controversial proposal. Equities have higher expected returns than government bonds, which are the only asset the Trust Fund currently holds. So investing a portion of these assets in stocks could reduce the program’s long-term financing shortfall. But critics see this step as crossing a red line in the government’s involvement in the private economy. They also see the greater risk inherent in equity investments as offsetting the higher expected returns. The experience of the government’s Railroad Retirement program, which now invests in equities, provides lessons that address these concerns. Railroad Retirement and Social Security have long been closely connected. Congress created the Railroad Retirement program in 1934, one year before the enactment of Social Security, when it took over the rail industry’s tottering pension plans in the midst of the Great Depression. The two programs have the same pay-as-you-go social insurance structure, funded by a payroll tax on workers and employers. Both had relatively modest Trust Funds, with the assets invested solely in government bonds. In the 1990s, however, the use of equities became central to proposals to reform each program. Nothing was done in Social Security. But in 2001, Congress enacted legislation that introduced equities into the Railroad Retirement program. This brief, based on a recent study, reviews the experience of Railroad Retirement for lessons it might provide on the use of equities in Social Security. The discussion proceeds as follows. The first section describes the development of the proposal to invest Railroad Retirement assets in equities. The second section discusses how the 2001 reform addressed the risk of political influence on investment decisions. The third section discusses how the reform addressed the financial risk in equity investment. The final section concludes that investing Social Security assets in equities would require managing the risk of political influence, by limiting investment discretion, and managing financial risk, by creating an automatic way to respond to major financial shocks. |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2013-16&r=age |
| By: | Machado, C. Sofia (Instituto Politécnico do Cávado e do Ave); Portela, Miguel (University of Minho) |
| Abstract: | Using a panel of new firms and their employees, this paper studies the promotion opportunities for older workers within the same firm. Survival analysis suggests that younger employees experience shorter times to promotion than older workers and, therefore, the latter face a smaller likelihood of promotion. Although men are promoted more often than women, empirical results show that women have shorter survival times to promotion than men. Also, previous promotions are stronger determinants of subsequent ones and this finding provides support to the evidence on promotion "fast-tracks". |
| Keywords: | aging, older workers, employment relationships, promotion |
| JEL: | J14 J21 D21 J62 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7784&r=age |
| By: | ARSLAN, Yavuz; CERİTOĞLU, Evren; KANIK, Birol |
| Abstract: | In this study, we investigate the effects of age structure dynamics of population on the housing demand in Turkey. The critical question is how the housing demand moves in the environment of positive population growth with declining rate and aging population. We use TurkStat Household Budget Survey to determine the link between household housing demand and household age cohorts. We obtain housing demand for each age cohorts and long term housing demand for Turkey by utilizing TurkStat population forecasts. Estimation results indicate that age structure of population has a notable effect on the growth of housing demand besides population growth. The results show housing demand will increase 1.48 percent annually on average from 2009 to 2050 where 1.08 percent of the increase will be contributed by population growth and the rest of 0.40 percent will be derived by the change in age structure of the population. |
| Keywords: | Housing demand; Demographics; Home ownership |
| JEL: | J11 R21 R30 |
| Date: | 2013–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52013&r=age |
| By: | SEKIZAWA Yoichi; YOSHITAKE Naomi; GOTO Yasuo |
| Abstract: | This study investigated the association between depressive symptoms and variables related to socio-economic status (SES) in middle-aged and elderly Japanese, focusing on the differences between men and women. We used data from the Japanese Study of Aging and Retirement (JSTAR). Depression was measured using the Center for Epidemiologic Studies Depression Scale (CES-D). Income and bank deposits were divided into four categories according to their amounts. After adjusting for age, number of illnesses, sex, marital status, education, employment status, house owning, existence of loan, and smoking status, the CES-D scores of the lowest income category are significantly higher than those of the other three categories for men. On the other hand, the association is not clear for women. Regarding bank deposits, there was no significant difference in the CES-D scores among the four categories of bank deposit amounts for men. However, CES-D scores of the lowest bank deposit category were significantly higher than the upper two categories for women. |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:13077&r=age |
| By: | Yumi Saita (Hitotsubashi University); Chihiro Shimizu (Reitaku University and University of British Columbia); Tsutomu Watanabe (The University of Tokyo) |
| Abstract: | In this paper, we empirically investigate how real estate prices are affected by aging. We run regional panel regressions for Japan and the United States. Our regression results show that, both in Japan and the U.S., real estate prices in a region are inversely correlated with the old age dependency ratio, i.e. the ratio of population aged 65+ to population aged 20-64, in that region, and positively correlated with the total number of population in that region. The demographic factor had a greater impact on real estate prices in Japan than in the U.S. Based on the regression result for Japan and the population forecast made by a government agency, we estimate the demographic impact on Japanese real estate prices over the next 30 years. We find that it will be -2.4 percent per year in 2012-2040 while it was -3.7 percent per year in 1976-2010, suggesting that aging will continue to have downward pressure on land prices over the next 30 years, although the demographic impact will be slightly smaller than it was in 1976-2010 as the old age dependency ratio will not increase as much as it did before. |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:cfi:fseres:cf334&r=age |
| By: | Denise Saßenroth; Martin Kroh; Gert G. Wagner |
| Abstract: | Like many medical studies, the Berlin Aging Study II (BASE·II) is based on a non·random “convenience sample” of self·recruited participants. To study processes of selectivity in BASE·II, we used an identical questionnaire to compare BASE·II with a large, representative reference study, the German Socio·Economic Panel (SOEP), thereby allowing differences in characteristics of participants in BASE·II and SOEP to be analysed easily. Based on this selectivity analysis, we then generated propensity score weights that adjust for the selectivity in the BASE·II survey. In addition, we adjusted the weights of the BASE·II sample to regional information from the Federal Statistical Office so that the BASE·II study has the same totals as the official statistics. |
| Keywords: | Convenience sample, selectivity, weighting, Berlin Aging Study II, BASE·II, SOEP |
| JEL: | C18 C23 C8 I1 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp608&r=age |
| By: | Carlos Farinha; Isabel Andrade |
| Abstract: | The redistributive effect of the Portuguese welfare state through pensions, benefits and taxes is investigated in detail over the 2006-10 period using disposable income as benchmark. All social and fiscal policy instruments analysed contribute significantly to the reduction in inequality and poverty, with benefits other than pensions being the most cost-efficient. However, the impact of the economic crisis and austerity policies implemented from 2010 has reversed the previous trends and affected negatively the efficacy and efficiency of all instruments. |
| Keywords: | income inequality, redistribution, tax and expenditure policy, Portugal. |
| JEL: | C81 D31 H22 H55 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp282013&r=age |