nep-age New Economics Papers
on Economics of Ageing
Issue of 2014‒09‒29
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Overlooked Option for Boosting Retirement Savings: Higher Limits for RRSPs By Alexandre Laurin
  2. Effects of stress on economic decision-making: Evidence from laboratory experiments By Delaney, Liam; Fink, Günther; Harmon, Colm
  3. Renteneintritt und Hausarbeit By David Stich; Moritz Hess
  4. Three Arrows of “Abenomics†and the Structural Reform of Japan : Inflation Targeting Policy of the Central Bank, Fiscal Consolidation, and Growth Strategy By Naoyuki Yoshino; Farhad Taghizadeh-Hesary
  5. Re-weighting EUROMOD for demographic change: an application on Slovenian and Lithuanian data By Kump, Nataša; Navicke, Jekaterina
  6. Labor Supply and the Optimality of Social Security By Shantanu Bagchi
  7. Welfare-to-Work Reform and Intergenerational Support: Grandmothers’ Response to the 1996 PRWORA By Christine Ho

  1. By: Alexandre Laurin
    Abstract: Government policymakers should not overlook enhancing RRSPs as a way to boost retirement savings by Canadians, according to a report from the C.D. Howe Institute. In “The Overlooked Option for Boosting Retirement Savings: Higher Limits for RRSPs,” author Alexandre Laurin finds that those who most need private saving to meet their retirement income goals use RRSPs more extensively than widely believed.
    Keywords: Governance and Public INstitutions, Pension, Retirement
    JEL: D14 J32
  2. By: Delaney, Liam; Fink, Günther; Harmon, Colm
    Abstract: The ways in which preferences respond to the varying stress of economic environments is a key question for behavioral economics and public policy. We conducted a laboratory experiment to investigate the effects of stress on financial decision making among individuals aged 50 and older. Using the cold pressor task as a physiological stressor, and a series of intelligence tests as cognitive stressors, we find that stress increases subjective discounting rates, has no effect on the degree of risk-aversion, and substantially lowers the effort individuals make to learn about financial decisions.
    Keywords: stress, financial decisions, discounting, risk aversion, learning,
    Date: 2014
  3. By: David Stich; Moritz Hess
    Abstract: This paper investigates how the retirement of one spouse affects the division of household labor in couples. Two streams of theory can be found explaining the division of household labor. The economic theories predict that the spouse - women or men - how earns less money on the labor market will have higher share of domestic labor. The value based theories explain the division of household labor with shared norms and customs. In couples with conservative values women do most of the household labor, while in modern couples the division is more equal. Applying these two streams of theories to the retirement process two hypotheses are stated: 1) The retirement of a spouse does not affect the division of household labor. 2) The retirement of a spouse does affect the division of household labor. The hypotheses are tested using fixed-effect models and SOEP data. Results show that the share of household labor increases after retirement for men and women alike.
    Keywords: Renteneintritt, Hausarbeit, Geschlechterunterschiede
    Date: 2014
  4. By: Naoyuki Yoshino (Asian Development Bank Institute (ADBI)); Farhad Taghizadeh-Hesary
    Abstract: “Abenomics†refers to the economic policies advocated by Prime Minister Shinzo Abe who became prime minister of Japan for a second time when his party, the Liberal Democratic Party, won an overwhelming majority at the general election in December 2012. Abenomics has “three arrows†: (i) aggressive monetary policy, (ii) fiscal consolidation, and (iii) growth strategy. The Japanese economy faces an aging population and expanding social welfare expenses. No other country has experienced Japan’s rapid growth of retired people. In this paper we will explain these three aspects of Abenomics and the current state of the Japanese economy, and examine what further remedies may be required if Japan is to recover from its long-term deflation. We look at such proposals as hometown investment trust funds and postponing of the retirement age through the introduction of a flexible wage rate system.
    Keywords: Abenomics, Japan, aging population, the Japanese economy, retired people, long-term deflation, a flexible wage rate system
    JEL: E52 E62 G21
    Date: 2014–08
  5. By: Kump, Nataša; Navicke, Jekaterina
    Abstract: This paper discusses an application of re-weighting to account for demographic change within a comparative micro-simulation setting. We use the Slovenian and Lithuanian components of the EUROMOD micro-simulation model with data referring to demographic characteristics of the population in 2010 to test the proposed procedures. The data are re-weighted to reflect demographic change up to 2012 and 2020 as indicated in the Eurostat Population Projections (Europop).
    Date: 2014–06–25
  6. By: Shantanu Bagchi (Department of Economics, Towson University)
    Abstract: Traditional economic theory predicts that unfunded social security can be justified on the basis of its ability to efficiently finance retirement, and also for its ability to provide insurance against mortality risk and uninsurable shocks to labor income. In this paper, I demonstrate that the quantitative importance of the traditional roles of social security depends on how household labor supply responds to social security. I build a calibrated general-equilibrium model where social security has a large welfare-improving role, and I show that the distortionary effect on households' labor hours erases virtually all the welfare gains from social security. I also find that this result is robust within the range of labor supply elasticities usually encountered in the macroeconomic literature..
    Keywords: Labor supply, Social security, Mortality risk, Productivity shock, Insurance, Elasticity.
    JEL: E21 H55 J22
    Date: 2014–09
  7. By: Christine Ho (School of Economics, Singapore Management University, Singapore, 178903)
    Abstract: The 1996 Personal Responsibility and Work Opportunity Reconciliation Act in the US aimed at encouraging work among low income mothers with children aged below 18. In this paper, we use a sample of 2,843 intergenerational family observations from the Health and Retirement Study to estimate the effects of the reform on single grandmothers who are related to those mothers. The results suggest that that the reform decreased time transfers but increased money transfers from grandmothers. Our results are consistent with an intergenerational family support network where higher child care subsidies motivated the family to shift away from grandmothe provided child care, and where grandmothers increased money transfers to either help cover the remaining cost of formal care or to partly compensate for the loss in benefits of welfare leavers.
    Keywords: child care, indirect intent-to-treat effects, intergenerational family, welfare reform
    Date: 2014–09

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