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on Economics of Ageing |
| By: | Karolina Goraus (Faculty of Economic Sciences, University of Warsaw); Krzysztof Makarski (National Bank of Poland, Warsaw School of Economics); Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland) |
| Abstract: | The objective of this paper is to analyze the welfare effects of raising the retirement age. With aging populations, in many countries de iure retirement age has been raised. With a standard assumption that individuals prefer leisure to work, such policy necessitates some welfare deterioration. This could be outweighed by lower taxation (defined benefit schemes becoming more balanced) or higher pension benefits (defined contribution schemes yield higher effective replacement rate). Moreover, it is often argued that actuarially fair pension systems provide sufficient incentives for individuals to extend the number of working years, which undermines the need to change de iure retirement age. In this paper we construct an OLG model in which we analyze welfare effects of extending the retirement age under PAYG defined benefit, PAYG defined contribution and partially funded defined contribution pension schemes. We find that such policy is universally welfare improving. However, postponed retirement translates to lower savings, which implies decrease in per capita capital and output. |
| Keywords: | PAYG, retirement age, pension system reform, time inconsistency, welfare |
| JEL: | C68 E17 E25 J11 J24 H55 D72 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2014-03&r=age |
| By: | Fabrizio Mazzonna (IDEP and CEPRA, Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera.); Franco Peracchi (Istituto Einaudi per l'Economia e la Finanza (EIEF) and Dipartimento di Economia e Finanza Facoltà di Economia Università degli Studi di Roma "Tor Vergataâ€, Roma, Italia.) |
| Abstract: | We investigate the causal effect of retirement on health and cognitive abilities by exploiting the variation between and within European countries in old age retirement rules. We show negative and significant effect of retirement on both health and cognitive abilities. We also show evidence of significant heterogeneity across occupational groups. In particular, the negative effect of retirement disappears and turn to be even positive for those working in very physically demanding jobs. |
| Keywords: | Aging, cognitive abilities, retirement, occupation, SHARE |
| JEL: | C26 I14 J14 J24 J26 |
| Date: | 2014–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:1401&r=age |
| By: | Aaron George, Grech |
| Abstract: | The last two decades have been characterised by significant changes in national pension arrangements. While at first, a consensus seemed to be evolving around a one-size-fits-all reform, more recently the trend has been towards a better customisation of reforms. This paper reviews this process, focusing on five pension policy design issues. These are how policymakers have sought to optimise poverty alleviation effectiveness; the redefinition of the state’s role in smoothing incomes over the life-course; the balancing of contributions to benefits; adjusting the system to be more responsive to demographic, economic and social changes; and ensuring that reforms will be long-lasting. While the role of state pensions still appears to be on a diminishing path, there has been a growing realisation of the need to ensure that they remain adequate. This has led to the setting up of innovative minimum pension schemes and credits for periods of childcare and unemployment. The expanding role of private pensions has also led governments to intervene more in their operation. Policymakers have shown strong interest in automatic adjustment mechanisms, to try to bring about required economic changes. However there is greater understanding that for the latter to happen, the state has to engage more with its citizens. While changes in pension systems can help societies respond to the ageing transition, for instance by removing incentives to retire too early or by aligning better the generosity of benefits to contributions made, there will need to be a much broader policy response. |
| Keywords: | Social Security and Public Pensions; Retirement; Poverty; Retirement Policies |
| JEL: | H55 I38 J26 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53662&r=age |
| By: | Alan L. Gustman; Thomas L. Steinmeier |
| Abstract: | This paper constructs and estimates a dynamic model of the evolution of health for those over the age of 50 and then embeds that model of health dynamics in a structural, econometric model of retirement and saving. The health model traces the effects of smoking, obesity, alcohol consumption, depression and other proclivities on medical conditions, including hypertension, diabetes, cancer, lung disease, heart problems, stroke, psychiatric problems and arthritis. These in turn influence an overall index of health status based on self-reported health, work limitations and ADLs, which is used to classify the population into good, fair, poor or terrible health. Compared to a situation where the entire population is in good health, the current health status of the population reduces the retirement age of the entire population by an average of about one year. While poor health or terrible health have a great impact on the disutility of work and thus on retirement, fair health as opposed to good health has a relatively minor effect. Smoking depresses full-time work effort by up to 3.5 percentage points by those in the early sixties, reducing the average retirement age by four to five months. Effects of trends in health care and health policies on retirement are also analyzed. Including detailed measurement of health dynamics in a retirement model improves understanding of the effects of health on retirement. It does not, however, influence estimates of the marginal effects of economic incentives on retirement. |
| JEL: | D31 D91 E21 H55 I1 I3 J14 J18 J26 J3 J32 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19902&r=age |
| By: | O'Connell, Alison |
| Abstract: | This paper focuses on New Zealand's longevity trends and their relevance to the age of eligibility for New Zealand Superannuation (NZS). The age of eligibility for NZS was a key issue in the 2010 and previous Reviews of Retirement Income Policy. The paper investigates longevity trends as a driver for considering reform of the age of eligibility, including possible ways in which the age of eligibility could be linked to forecasts of future life expectancy. |
| Keywords: | Superannuation, Longevity trends, New Zealand superannuation, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwcpf:3168&r=age |
| By: | Onder, Harun; Pestieau, Pierre; Ley, Eduardo |
| Abstract: | Bulgaria is in the midst of a serious demographic transition that will shrink its population at one of the highest rates in the world within the next few decades. This study analyzes the macroeconomic and fiscal implications of this demographic transition by using a long-term model, which integrates the demographic projections with social security, fiscal and real economy dimensions in a consistent manner. The simulations suggest that, even under fairly optimistic assumptions, Bulgaria's demographic transition will exert significant fiscal pressures and depress the economic growth in the medium and long term. However, the results also demonstrate that the Government of Bulgaria can play a significant role in mitigating some of these effects. Policies that induce higher labor force participation, promote productivity and technological improvement, and provide better education outcomes are found to counteract the negative consequences of the demographic shift. |
| Date: | 2014–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6774&r=age |
| By: | Paula C. Albuquerque |
| Abstract: | The rapid ageing of the population, particularly in the developed world, accentuates the importance of both the family and of private intergenerational transfers, whether this be due to the longer periods of coexistence resulting from longer life expectancy or the threat posed to the very sustainability of the welfare state. While the magnitude of intergenerational transfers is well documented, and the motives underlying them have received broad attention, we focus on a much less studied topic: the way the different forms of private transfers – time, money and space - interact with each other. In order to understand the complete effects of decisions, the costs and benefits to donors and recipients of transfers, it is crucial to take into account the full set of options for family transfers. We survey the literature to ascertain current knowledge on the extent to which a) the provision of one form of intergenerational family transfer is related to the provision of another form by the same person; b) the modes adopted by different generations are interrelated. We then put forward suggestions for future research and conceptual refinement. |
| Keywords: | Intergenerational transfers, support, family, population ageing. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp032014&r=age |
| By: | Neuberger, Doris; Räthke-Döppner, Solvig |
| Abstract: | To sustain growth in an aging economy, it is important to ease the financing of small firms by bank loans. Using bank internal data of small business loans in Germany, we examine the determinants of loan rates in the period 1995-2010. Beyond characteristics of the firm, the loan contract, and the lending relationship, demographic aspects matter. However, collateral and relationship lending play a larger role in loan pricing than the entrepreneur's age. Banks do not seem to discriminate older borrowers by higher loan rates. We rather find statistical discrimination of younger borrowers because of their lower wealth. Single entrepreneurs obtain cheaper loans than married ones. Firms in peripheral regions with low population density are disadvantaged by higher loan rates compared to those in agglomerated regions. -- |
| Keywords: | small business finance,savings banks,relationship lending,aging,demographic change |
| JEL: | D14 E43 G21 J14 L26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:roswps:134&r=age |