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on Economics of Ageing |
| By: | James M. Poterba |
| Abstract: | The share of the U.S. population over the age of 65 was 8.1 percent in 1950, 12.4 percent in 2000, and is projected to reach 20.9 percent by 2050. The percent over 85 is projected to more than double from current levels, reaching 4.2 percent by mid-century. The aging of the U.S. population makes issues of retirement security increasingly important. Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of the income distribution, Social Security is the most important source of support; program changes would directly affect their well-being. Income from private pensions, assets, and earnings are relatively more important for higher-income elderly individuals, who have more diverse income sources. The trend from private sector defined benefit to defined contribution pension plans has shifted a greater share of the responsibility for retirement security to individuals, and made that security more dependent on choices they make. A significant subset of the population is unlikely to be able to sustain their standard of living in retirement without higher pre-retirement saving. |
| JEL: | E21 G11 H55 J14 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19930&r=age |
| By: | Rafael NOVELLA; Javier OLIVERA |
| Abstract: | This paper analyses the effects of retirement on cognitive abilities for the elderly poor on the basis of the “mental retirement” effect that accompanies retirement. Given the recent emergence and expansion of non-contributory pension programs to alleviate poverty in old-age across low and middle income countries, attention should be pay to the potential acceleration of cognitive decline when individuals retire, i.e. when there is a decrease in their engagement on cognitive demanding activities. We use a unique and recent survey of the poor elderly in Peru (ESBAM) which includes a cognitive test and serves as the baseline for a non-contributory pension program. We find a significant negative effect of retirement on cognitive ability after controlling for a number of demographics and objective health measures, and even after applying instrumental variables to deal with the potential endogeneity of retirement. |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces14.05&r=age |
| By: | Pilar García-Gómez; Sergi Jiménez-Martín; Judit Vall Castelló |
| Abstract: | In this work we combine wage data from Social Security working histories and health information available in the Survey of Health and Retirement in Europe to explore the link between health, financial incentives and retirement in Spain. Our results show that individuals in worse health quintiles are, indeed, the more responsive to financial incentives as they prove to be less likely to retire when incentives to continue working increase. |
| JEL: | H55 I18 J11 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19913&r=age |
| By: | Alicia H. Munnell |
| Abstract: | The brief’s key findings are: Older people have lower labor force participation rates than younger adults, so aging baby boomers are pushing down overall participation. This aging effect accounts for more than 40 percent of the decline since the onset of the Great Recession. An aging population also lowers unemployment slightly because older individuals who remain in the labor force are more likely to have a job. The aging trend will continue for the rest of the decade and will show up in monthly labor force statistics. |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2014-4&r=age |
| By: | Andrew Coleman (The Treasury) |
| Abstract: | Increases in longevity mean the size of New Zealand’s public retirement income programme, New Zealand Superannuation, will automatically expand unless the age of eligibility is increased. This paper analyses the consequences of expanding New Zealand Superannuation on a save-as-you-go basis through the New Zealand Superannuation Fund rather than on a pay-as-you-go basis. These funding mechanisms differ in terms of their effects on different cohorts, on long run tax rates, on capital accumulation, and on risk. The paper argues that an automatic pay-as-you-go funded expansion of New Zealand Superannuation is unattractive on many grounds, even if pay-as-you-go funding remains for much of the programme. In addition to reducing long run tax rates, the use of save-as-you-go funding through the New Zealand Superannuation Fund provides households with a means of reducing income risk over the course of their lives. |
| Keywords: | Retirement income policy; prefunding; intergenerational economics |
| JEL: | E21 H55 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nzt:nztwps:14/02&r=age |
| By: | Shimasawa, Manabu; Oguro, Kazumasa; Toyoda, Nao |
| Abstract: | This study examines whether or not aging is increasing the political influence wielded by Japan’s elderly and promoting a so-called “gray democracy.” Using a median voter model based on data from Japan’s 47 prefectures during the period from 2000 to 2010, we examined the relationship between aging and geriatric expenditures. As a result, controlling income, expenditures, economic conditions, and political factors, we found that geriatric welfare expenditures increase along with median age. The findings utilizing this median voter model imply that the aging median voter may be able to gain substantial benefit through voting. If this prefectural-level relationship between aging and increasing geriatric expenses is reflected on a national level, one may conclude that Japan’s continued aging will likely strengthen the political influence of the elderly with respect to increased social security benefits. |
| Keywords: | aging, political aging, panel data, political economy, median voter model |
| JEL: | C23 H55 J18 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cisdps:615&r=age |
| By: | Amar Hamoudi; Duncan Thomas |
| Abstract: | We investigate whether living arrangements respond to an arguably exogenous shift in the distribution of power in family economic decision-making. In the early 1990s, the South African Old Age Pension was expanded to cover most black South Africans above a sex-specific age cut-off resulting in a substantial increase in the income of older South Africans and potentially their say in the economic decisions of their families. Beneficiaries of the program are more likely to coreside with adults who have less human capital as measured by height and education. Since height and education are fixed for adults, this cannot be an effect of the pension income but reflects selective changes in living arrangements resulting from the pension. The findings highlight the endogeneity of living arrangements and illustrate the potential value of moving beyond theory and data that are confined to a spatially determined definition of the household. |
| JEL: | C81 I38 J12 O12 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19929&r=age |
| By: | Eichhorst, Werner (IZA) |
| Abstract: | Angesichts des demographischen Wandels wird es immer wichtiger, dass sich Unternehmen und Erwerbstätige auf ein längeres Erwerbsleben einstellen. Eine höhere Beschäftigungsquote älterer Arbeitskräfte und ein späterer Renteneintritt erlauben die Mobilisierung von dringend benötigten Arbeitskräfte- und Fachkräftepotenzialen. Dies wird um so besser gelingen, je mehr auf Pflege und Entwicklung der Beschäftigungsfähigkeit im Lebensverlauf geachtet wird, sowohl durch Aus- und Weiterbildung als auch durch die Gestaltung von Arbeitsbedingungen und Entwicklungsmöglichkeiten, die ein längeres, gesünderes und produktiveres Erwerbsleben erlauben. Im nachfolgenden Text sollen die wesentlichen Herausforderungen aufgezeigt und Lösungsansätze vorgestellt werden, die Politik, Sozialpartner, Betriebe und Beschäftigte gleichermaßen angehen. |
| Keywords: | ageing, demographic trends, elderly, labor force projection, public policy, retirement, continuous vocational training, working conditions |
| JEL: | J11 J14 J26 J28 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izasps:sp64&r=age |
| By: | Arnberg, Søren; Barslund, Mikkel |
| Abstract: | This paper aims to estimate the crowding-out effect of the Danish mandatory labour market pension reforms begun in 1993 on the level of total household savings for renters. The effect is identified via a large panel of individual administrative records utilising the differences in speed, timing and sectoral coverage of the implementation of the reform in the period 1997 to 2005. Little substitutability was found between current mandatory labour market pension savings and private voluntary savings. Each euro paid into mandatory labour market pension accounts results in a reduction in private savings of approximately 0 to 30 cents, depending on age. This low rate of substitution is only, to a minor extent, explained by liquidity constraints. The results point to mandatory pension savings having a large effect on total household savings. Thus, pension reforms that introduce mandatory savings have macroeconomic implications. |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:8911&r=age |
| By: | James Banks; Carl Emmerson; Gemma Tetlow |
| Abstract: | This paper examines to what extent differences in employment rates across those in better and worse health in the UK can be explained by the availability of publicly-funded disability insurance and the financial incentives provided by other retirement income schemes. Using an option value approach, we find that individuals’ labor force participation is affected by financial incentives. A one standard deviation change in the option value is estimated to reduce the likelihood of an individual leaving the labor market in the next year by between 2.7 and 3.1 percentage points, relative to an average exit probability of 9.4%. This suggests the variation in financial incentives across different individuals could explain a significant proportion of retirements. However, we find no evidence that individuals with different levels of health respond to our measure of financial incentives differently. We also conclude that it would require a very large change in the stringency of the disability insurance program on its own to generate an economically significant change in overall employment rates of older workers in the UK. This reflects the fact that – for many individuals in the UK – the level of disability benefits they might be able to receive is low relative to the amount they could earn and, therefore, large changes in rates of eligibility would not induce large changes in overall employment rates. |
| JEL: | H55 J21 J26 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19907&r=age |