nep-age New Economics Papers
on Economics of Ageing
Issue of 2015‒08‒13
25 papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Will the Average Retirement Age Continue to Increase? By Matthew S. Rutledge; Christopher M. Gillis; Anthony Webb
  2. The Transition from Defined Benefit to Defined Contribution Pensions: Does It Influence Elderly Poverty? By Natalia S. Orlova; Matthew S. Rutledge; April Yanyuan Wu
  3. Cash and Pensions: Have the elderly in England saved optimally for retirement? By Rowena Crawford; Cormac O'Dea
  4. A Reporting Standard for Defined Contribution Pension Plans By Kees de Van; Daniele Fano; Herialt Mens; Giovanna Nicodano
  5. Pensions, Education, and Growth: A Positive Analysis By Tetsuo Ono; Yuki Uchida
  6. The Financial Support for Long-Term Elderly Care and Household Savings Behaviour By Ohinata, Asako; Picchio, Matteo
  7. Pensions, Savings and Housing: A Life-cycle Framework with Policy Simulations By John Creedy; Norman Gemmell; Grant Scobie
  8. Does the Social Security “Statement” Add Value? By Steven A. Sass
  9. The Role of Occupations in Differentiating Health Trajectories in Later Life By Michal Engelman; Heide Jackson
  10. A tale of three distributions: inheritances, wealth and lifetime income By Rowena Crawford; Andrew Hood
  11. Labour supply effects of increasing the female state pension age in the UK from age 60 to 62 By Jonathan Cribb; Carl Emmerson; Gemma Tetlow
  12. The labor market effect of demographic change: Alleviation for financing social security By Friese, Max
  13. Left Behind, At Risk, and Vulnerable Elders in Rural China: What the RUMIC Data Reveal about the Extent, Causes, and Consequences of Being Left Behind By Connelly, Rachel; Maurer-Fazio, Margaret
  14. The Political Economy of Underfunded Municipal Pension Plans By Holger Sieg; Daniele Coen-Pirani; Jeffrey Brinkman
  15. Travel Motivations of Seniors: A Review and a Meta-Analytical Assessment By Roberto Patuelli; Peter Nijkamp
  16. Managing Systematic Mortality Risk in Life Annuities: An Application of Longevity Derivatives By Man Chung Fung; Katja Ignatieva; Michael Sherris
  17. Life-cycle consumption patterns at older ages in the US and the UK: can medical expenditures explain the difference? By James Banks; Richard Blundell; Peter Levell; James P. Smith
  18. Disability benefit receipt and reform: reconciling trends in the United Kingdom By James Banks; Richard Blundell; Carl Emmerson
  19. Fluctuations in hours of work and employment across age and gender By Guy Laroque; Sophie Osotimehin
  20. Savings and wealth of the lifetime rich: evidence from the UK and US By Antoine Bozio; Carl Emmerson; Cormac O'Dea; Gemma Tetlow
  21. Statistical Emulators for Pricing and Hedging Longevity Risk Products By James Risk; Michael Ludkovski
  22. Subjective well-being across the lifespan in Europe and Central Asia By Bauer,Jan Michael; Levin,Victoria; Munoz Boudet,Ana Maria; Nie,Peng; Sousa-Poza,Alfonso
  23. Credit Constraints and the Composition of Housing Sales. Farewell to First-Time Buyers? By Felipe Carozzi
  24. Differences in the Estimates of Gender Wage Gap Over The Life Cycle By Joanna Tyrowicz; Lucas van der Velde; Irene van Staveren
  25. The Age-Happiness Puzzle: The Role of Economic Circumstances and Financial Satisfaction By Ingebjørg Kristoffersen

  1. By: Matthew S. Rutledge; Christopher M. Gillis; Anthony Webb
    Abstract: Using Health and Retirement Study (HRS) data, this paper examines how changes in individual workers’ past and present pension coverage, retirement incentives in Social Security, and retiree health insurance have contributed to retirement decisions for the 1931-1953 birth cohorts. It then uses these findings to project retirement behavior for the 1955-1987 cohorts in the Survey of Income and Program Participation (SIPP). A key assumption is that younger cohorts will have no defined benefit (DB) pensions or retiree health coverage in their future jobs. A key limitation is the assumption of a stable relationship in each successive cohort between each factor and labor market decisions. The paper found that: - The decrease in DB pension coverage from previous jobs and the decline in retiree health coverage between the HRS and SIPP cohorts each push the retirement age up by approximately one year, all else equal. - The one-year increase in Social Security’s Full Retirement Age is associated with a 0.3-year increase in the retirement age, all else equal. - After accounting for other differences between the HRS and SIPP cohorts, the average retirement age is projected to rise by one year over the next three decades, from age 61.8 to 62.8. The policy implications of the findings are: - We anticipate that changes in pensions, retiree health benefits, and Social Security that are already in motion will continue to increase, albeit slightly, the average retirement age. - Nonetheless, policies aimed at extending retirement ages may still be necessary, given that a one-year retirement age increase is likely to be insufficient to permit future cohorts to achieve a sufficient standard of living.
    Date: 2015–07
  2. By: Natalia S. Orlova; Matthew S. Rutledge; April Yanyuan Wu
    Abstract: The transition from defined benefit (DB) to defined contribution (DC) pension plans has left workers forced to make choices that may decrease their financial resources in retirement: taking lump-sum distributions before retirement that divert funds that could support consumption in retirement, not annuitizing DC benefits, or choosing a single-life annuity over a joint-and-survivor option so that their surviving spouses are left susceptible to income loss. This study examines pension coverage, lump-sum distributions, annuitization, and annuity life options among Health and Retirement Study households observed at ages 65-69 and 75-79 and relates these pension provisions to poverty incidence and the risk of falling into poverty at older ages. The results indicate that households with pensions that are annuitized with the joint-and-survivor life option and that do not take lump-sum distributions before age 55 are best able to avoid income and asset poverty. The results emphasize the importance of making DC plans operate more like DB plans, because the opportunities for these poor financial choices are likely only to grow given the reliance on DC plans as the sole source of employer pension income for future cohorts of retirees.
    Date: 2015–07
  3. By: Rowena Crawford (Institute for Fiscal Studies); Cormac O'Dea (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: Using a model where households can save in either a safe asset or in an illiquid, tax-advantaged pension, we assess the extent to which those who recently reached the state pension age in the UK have saved optimally for retirement. The policy environment specified closely matches that prevailing in the UK. Using the model and administrative data linked with survey data from the English Longitudinal Study of Ageing, an optimal level of wealth is calculated for each household. This is compared to the levels of wealth observed in the data. Our results show that, for those born in the 1940s, the vast majority of households have wealth levels far greater than necessary to maintain their living standards into and through retirement.
    Date: 2014–09
  4. By: Kees de Van (Syntrus Achmea Vermogensbeheer); Daniele Fano (Tor Vergata University); Herialt Mens (Aegon Asset Management); Giovanna Nicodano (University of Torino and CeRP-Collegio Carlo Alberto)
    Abstract: We propose a method for projecting pension benefits, deriving from DC pension plans and other funded products, at retirement. Projections highlight how the current choice of asset allocation impacts on future potential retirement outcomes. The latter are compared with a money-back benchmark so as to clarify the trade-off between risk and return. After the initial projections, the pension plan revises its forecasts of retirement benefits on a yearly basis as a function of its own realized returns. Previous shorter-term projections are also compared to shorter-term ex-post performance. This simple method is a step towards an industry-reporting standard that responds to regulators’ quest for helping investors monitor the risk of their future pension.
    Date: 2014–11
  5. By: Tetsuo Ono (Graduate School of Economics, Osaka University); Yuki Uchida (Graduate School of Economics, Osaka University)
    Abstract: This study presents an overlapping generations model to capture the nature of the competition between generations regarding two redistribution policies, public education and public pensions. From a political economy viewpoint, we investigate the effects of population aging on these policies and economic growth. We show that greater longevity results in a higher pension-to-GDP ratio. However, an increase in longevity produces an initial increase followed by a decrease in the public education- to-GDP ratio. This, in turn, results in a hump-shaped pattern of the growth rate.
    Keywords: economic growth; population aging; public education; public pen-sions
    JEL: D78 E24 H55
    Date: 2014–12
  6. By: Ohinata, Asako (University of Leicester); Picchio, Matteo (Università Politecnica delle Marche, Ancona)
    Abstract: We analyse how the financial support for long-term elderly care affects the level of household savings. Using a difference-in-differences estimator, we investigate the 2002 Scottish reform, which introduced free formal personal care for all the elderly aged 65 and above residing in Scotland. Our semiparametric estimation technique allows the policy effects to be flexibly estimated across age groups. We find that the Scottish policy reduced the average household saving by about £7,200. Moreover, the estimated effects are heterogeneous across age groups of the head of household: these effects are particularly strong among those aged between 40 and 60. The largest effect is observed at age 49 with the reduction in the average household saving by £12,764.
    Keywords: long-term elderly care, ageing, means tested financial support, saving, wealth, difference-in-differences
    JEL: C21 D14 I18 J14
    Date: 2015–07
  7. By: John Creedy; Norman Gemmell; Grant Scobie (The Treasury; The Treasury)
    Abstract: The objective of the paper is to explore the saving and consumption responses of a representative household to a range of policy interventions such as changes in taxes and pension settings. To achieve this, it develops a two-period life-cycle model. The representative household maximises lifetime utility through its choice of optimal levels of consumption, housing and saving. A key feature of the approach is modelling the consumption of housing services as a separate good in retirement along with the implications for saving. Importantly, the model incorporates a government budget constraint involving a pay-as-you-go universal pension. In addition, the model allows for a compulsory private retirement savings scheme. Particular attention in the simulations is given to the potential impact on household saving rates of a range of policy changes. Typically the effect on saving rates is modest. In most instances, it would take very substantial changes in existing policy settings to induce significant increases in household saving rates.
    Keywords: Savings; Housing; Retirement; Intertemporal elasticity of substitution; rate of interest; taxation
    JEL: D12 H24 H31 J26
    Date: 2014–11
  8. By: Steven A. Sass
    Abstract: Social Security is the nation’s most important source of retirement income, providing half or more of the monthly income of well over half of all retired house­holds. Workers planning their retirement thus need to know how much they and their spouse will get and how much more they could get if they work longer and claim later. Benefits, however, are set by a complicated formula based on a worker’s lifetime earnings record at retirement, the age he claims, the earnings record of a current or former spouse, whether that spouse is alive, and when that spouse claimed. So workers, on their own, cannot be expected to know how much they could get. The Social Security Administration (SSA) started an ambitious initiative in 1995 to address this issue. It began mailing out personalized annual Statements that provided estimates of an individual’s monthly benefit at various claiming ages. This brief reports the findings of studies produced by the Social Security Administration’s Retirement and Financial Literacy Research Consortiums that assessed the effectiveness of the initiative – whether the Statement made workers better informed about their benefits and whether it changed their behavior.
    Date: 2015–07
  9. By: Michal Engelman; Heide Jackson
    Abstract: This study characterizes heterogeneous trajectories of health among older Americans and investigates how employment histories differentiate them. Using the 1998-2010 waves of the Health and Retirement Study, we examine the impact of longest-held occupations on patterns of limitations in activities of daily living. We use latent class growth analysis to identify distinct health trajectory classes and linear growth curve analysis to model the pattern of limitation accumulation for individuals. All analyses are stratified by sex and race, to account for differential labor markets and health experiences of these demographic groups. A limitation of this analysis is its reliance on broad occupational categories rather than specific measures of working conditions. In future work, we plan to incorporate data on specific occupations and merge them with detailed information on occupational characteristics available in the O*NET database (an online repository that has updated the Dictionary of Occupational Titles used in previous research on aging and retirement and occupational epidemiology: The paper found that: - White respondents (both male and female) are substantially more likely to be in the healthiest class compared to black respondents. - Certain occupations are protective against membership in poor health classes, but the list of protective occupational categories differs substantially by sex and race. - The impact of occupations on health trajectories was diminished when we controlled for educational attainment and smoking, suggesting the important role of education in sorting individuals into occupations that differ in physical and cognitive demands that likely influence health. The policy implications of the findings are: - Life expectancy alone does not capture all the health information that would be relevant for assessing the capacity of American workers to stay on the job beyond traditional retirement ages. Legislators should consider differences in health and in the trajectories of functional decline across demographic groups defined by sex, race, and occupational exposures when debating further increases in the Social Security retirement age.
    Date: 2015–07
  10. By: Rowena Crawford (Institute for Fiscal Studies); Andrew Hood (Institute for Fiscal Studies)
    Abstract: This paper investigates the impact of inheritances and gifts received on the distribution of wealth among older households in England, and the implications for inequality in lifetime incomes. Whereas previous work has looked only at marketable wealth, we consider broader measures including public and private pensions. We find that once pension wealth is included, inheritances and gifts no longer have an equalising impact on the distribution of wealth. Without pension wealth, including transfers takes the wealth share of the top 10% from 40% to 38%; with pension wealth, the impact is near zero. This has important implications for the impact of inheritances and gifts on the distribution of lifetime incomes. Exploiting a link with administrative data on lifetime earnings, we show that savings rates are significantly increasing in lifetime incomes when pension wealth is excluded, but less so when it is included. Our results thus indicate that the impact of intergenerational transfers on the distribution of lifetime incomes among these individuals is likely to be negligible or inequality-increasing, rather than inequality-reducing.
    Keywords: Wealth, wealth transfers, inheritance, lifetime income, inequality
    Date: 2015–04
  11. By: Jonathan Cribb (Institute for Fiscal Studies); Carl Emmerson (Institute for Fiscal Studies); Gemma Tetlow (Institute for Fiscal Studies)
    Abstract: In a previous study we examined the impact on employment of increasing the state pension age for women from age 60 to 61 (Cribb, Emmerson and Tetlow, 2013). This short paper incorporates more recent data, now available up to March 2014, which allows us to study the impact on employment over the period when the female state pension age rose to age 62. Using the same difference-in-differences methodology as before, we find that women’s employment rates at ages 60 to 61 were increased by 5.9 percentage points as a result of the state pension age increasing from age 60 to age 62 between April 2010 and March 2014. We find no statistically significant evidence of a different impact on employment between April 2010 and March 2012 (when the state pension age rose from age 60 to 61) and between April 2012 and March 2014 (when it rose from age 61 to 62). The more recent data boost our sample size, allowing us to estimate the impact of the reform with greater precision. However, we continue to find little statistically significant evidence of differences in response among women with different characteristics. The one exception we find is that the rise in the state pension age increases the employment rate of single women by 10.1 percentage points, which is statistically significantly greater (at the 10% level) than the 4.4 percentage point increase we find for women in couples.
    Date: 2014–07
  12. By: Friese, Max
    Abstract: The paper shows the effect of demographic change on per capita burden of financing a PAYG social security system in the standard OLG model with frictional labor markets. Rising longevity and decreasing fertility both induce a rise in the employment level via increased capital accumulation and job openings. Simulations of the theoretical model show that this labor market effect indirectly crowds out part of the initial demographic shock's direct impact on per capita financing burden. This holds true for the generation at the period of impact as well as for the following generations.
    Keywords: OLG,demographic change,frictional labor market,PAYG social security,tax burden
    JEL: E24 E62 H55
    Date: 2015
  13. By: Connelly, Rachel (Bowdoin College); Maurer-Fazio, Margaret (Bates College)
    Abstract: Migration of any distance separates family members for long periods of time. In China, an institutional legacy continues to privilege the migration of working-age individuals who often leave children and elders behind in the rural areas. Up to now, the literature has treated children and elders analogously, labeling each group "left-behind". We argue that analysis of elder stayers needs to be more nuanced, distinguishing among differing groups of elders. Of these groups, those living alone without any adult children in the village are most at risk of negative consequences of migration, while those living with other non-migrant children are much less affected by migration. We find evidence, when focusing on the consequences of migration on elders, that an elder-centric analysis is preferable to a migrant-child-centric analysis.
    Keywords: living arrangements, aging, China, rural, elderly, left behind, at risk, migration
    JEL: J12 J14 J21 J26 O53
    Date: 2015–07
  14. By: Holger Sieg (University of Pennsylvania); Daniele Coen-Pirani (University of Pittsburgh); Jeffrey Brinkman (Federal Reserve Bank of Philadelphia)
    Abstract: The purpose of this paper is to provide an explanation of the political and economic determinants of underfunding of municipal pension funds. We develop a new dynamic politico-economic model within an overlapping generations framework. The key insight of the model is that underfunding can result in equilibrium even if individuals are fully informed, perfectly rational, and forward looking, and policies are capitalized in housing or land prices. Funding policies matter if housing also serves as collateral for households that are potentially credit constrained. The model suggests that differences in funding levels are systematically related to differences in economic fundamentals such as wage levels, the size of the public sector in a city, and the compensation of public sector workers measured by the current wage and retirement benefiÂÂ…ts. Finally, our analysis has some important policy implications. A policy intervention that mandates higher funding rates for municipalities than those adopted in equilibrium improves household welfare.
    Date: 2015
  15. By: Roberto Patuelli (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy); Peter Nijkamp (Department of Spatial Economics, VU University Amsterdam, The Netherlands; Faculty of Geographical and Geological Sciences, Adam Mickiewicz University, Poland; The Rimini Centre for Economic Analysis, Italy)
    Abstract: Over the past decades, leisure travel has become increasingly popular in older segments of the world population, as a consequence of global factors such as a rise in life expectancy, improved health conditions, a higher disposable income, and increased availability of discretionary time in retirement age. Consequently, researchers have become more interested in studying the motivations for travel of seniors. A number of questions may be raised or have been addressed in the recent past: What are the main factors explaining the travelling choices of seniors? Are their travel motivations different from the ones of the younger population, which have been widely studied in the past? Are geographical differences in terms of motivations comparable between different age groups? Why is senior tourism a topic of particular interest with regard to Asia? In order to answer such questions, in this paper we provide a review of the literature on the travel motivations of seniors. On the basis of 29 articles published on the topic, we provide a qualitative and meta-analytic assessment of past findings, by investigating the dimensions of travel motivations most frequently employed in past seniors surveys. Finally, we discuss a research agenda for further analysis of senior travel motivations and for the integration of this branch of travel research within a wider framework.
    Date: 2015–08
  16. By: Man Chung Fung; Katja Ignatieva; Michael Sherris
    Abstract: This paper assesses the hedge effectiveness of an index-based longevity swap and a longevity cap. Although swaps are a natural instrument for hedging longevity risk, derivatives with non-linear pay-offs, such as longevity caps, also provide downside protection. A tractable stochastic mortality model with age dependent drift and volatility is developed and analytical formulae for prices of these longevity derivatives are derived. Hedge effectiveness is considered for a hypothetical life annuity portfolio. The hedging of the life annuity portfolio is comprehensively assessed for a range of assumptions for the market price of longevity risk, the term to maturity of the hedging instruments, as well as the size of the underlying annuity portfolio. The model is calibrated using Australian mortality data. The results provide a comprehensive analysis of longevity hedging, highlighting the risk management benefits and costs of linear and nonlinear payoff structures.
    Date: 2015–08
  17. By: James Banks (Institute for Fiscal Studies and University of Manchester); Richard Blundell (Institute for Fiscal Studies and IFS and UCL); Peter Levell (Institute for Fiscal Studies); James P. Smith (Institute for Fiscal Studies)
    Abstract: In this paper we document significantly steeper declines in nondurable expenditures in the UK compared to the US, in spite of income paths being similar. We explore several possible causes, including different employment paths, housing ownership and expenses, levels and paths of health status, and out-of -pocket medical expenditures. Among all the potential explanations considered, we find that those to do with healthcare – differences in levels, age paths, and uncertainty in medical expenses – are the main factor accounting for the steeper declines in nondurable expenses in the UK compared to the US.
    JEL: D10 D11 D12 D14 D91
    Date: 2015–03
  18. By: James Banks (Institute for Fiscal Studies and University of Manchester); Richard Blundell (Institute for Fiscal Studies and IFS and UCL); Carl Emmerson (Institute for Fiscal Studies)
    Abstract: The UK has enacted a number of reforms to the structure of disability benefits, which has made it a major case study for other countries thinking of reform. The introduction of Incapacity Benefit in 1995 coincided with a strong decline in disability benefit expenditure, reversing previous sharp increases. From 2008 the replacement of Incapacity Benefit with Employment and Support Allowance was intended to reduce spending further. We bring together administrative and survey data over the period and highlight key differences in receipt of disability benefits by age, sex and health. These disability benefit reforms and the trends in receipt are also put into the context of broader trends in health and employment by education and sex. We document a growing proportion of claimants in any age group with mental and behavioural disorders as their principal health condition. We also show the decline in the number of older working age men receiving disability benefits to have been partially offset by growth in the number of younger women receiving these benefits. We speculate on the impact of disability reforms on employment.
    Date: 2015–03
  19. By: Guy Laroque (Institute for Fiscal Studies); Sophie Osotimehin (Institute for Fiscal Studies)
    Abstract: This paper documents the heterogeneity in labor market volatility across ages and gender in the United States over 1976-2014. We separate fluctuations in hours worked into fluctuations in the average number of hours per worker (the intensive margin) and fluctuations in the number of individuals at work (the extensive margin) and examine the relative importance of these two margins for each demographic group. We then compute the contribution of each demographic group to the change in aggregate hours worked over the business cycle. We discuss the implications of our findings for theories of labor market fluctuations.
    JEL: E24 E32 J21
    Date: 2015–01
  20. By: Antoine Bozio (Institute for Fiscal Studies and Paris School of Economics); Carl Emmerson (Institute for Fiscal Studies); Cormac O'Dea (Institute for Fiscal Studies and Institute for Fiscal Studies); Gemma Tetlow (Institute for Fiscal Studies)
    Abstract: Whether higher lifetime income households do save a larger share of their income is one of the longstanding empirical questions in economics that has been surprisingly difficult to answer. We use both consumption data and a new dataset containing both individual survey data on wealth holdings and administrative data on earnings histories from the UK to examine this question. We find evidence of a positive relationship between saving rates (and wealth accumulation) and levels of permanent income. Our findings are consistent with earlier results from Dynan, Skinner and Zeldes (2004) using consumption data from the US, but somewhat at odds with evidence from the UK which has examined retirement wealth and lifetime earnings in the Health and Retirement Study, HRS (Gustman & Steinmeier 1999, Venti & Wise 1998). We present new evidence using more recent HRS data, applying exactly the same methodology as we have used on the UK data, and find broadly the same results as these earlier papers. This suggests that the differences are not solely driven by differences in methodology or time period considered.
    Date: 2013–12
  21. By: James Risk; Michael Ludkovski
    Abstract: We propose the use of statistical emulators for the purpose of valuing mortality-linked contracts in stochastic mortality models. Such models typically require (nested) evaluation of expected values of nonlinear functionals of multi-dimensional stochastic processes. Except in the simplest cases, no closed-form expressions are available, necessitating numerical approximation. Rather than building ad hoc analytic approximations, we advocate the use of modern statistical tools from machine learning to generate a flexible, non-parametric surrogate for the true mappings. This method allows performance guarantees regarding approximation accuracy and removes the need for nested simulation. We illustrate our approach with case studies involving (i) a Lee-Carter model with mortality shocks, (ii) index-based static hedging with longevity basis risk; (iii) a Cairns-Blake-Dowd stochastic survival probability model.
    Date: 2015–08
  22. By: Bauer,Jan Michael; Levin,Victoria; Munoz Boudet,Ana Maria; Nie,Peng; Sousa-Poza,Alfonso
    Abstract: This paper uses data from the Integrated Values Survey, the Life in Transition Survey, and the Russia Longitudinal Monitoring Survey to analyze the relation between age and subjective well-being in the Europe and Central Asia region. Although the results generally confirm the findings of previous studies of a U-shaped relation between subjective well-being and age for most of the lifecycle, the paper also finds that well-being declines again after people reach their 60s and 70s, giving rise to an S-shaped relation across the entire lifespan. This pattern generally remains robust for most of the cross-sectional and panel analyses. Hence, despite significant heterogeneity in the pattern of well-being across the lifespan in the Europe and Central Asia region, the paper does not observe high levels of cross-country or cross-cohort variation.
    Keywords: Science Education,Educational Sciences,Youth and Government,Scientific Research&Science Parks,Population&Development
    Date: 2015–07–28
  23. By: Felipe Carozzi
    Abstract: During the housing bust of 2008-2009, home prices and transaction volumes fell across the entire United Kingdom. However, while the fall in prices was similar across housing types, transaction volumes fell more for homes at the lower end of the market. I document this fact and use an overlapping-generations model to relate it to the reduction in loan-to-value ratios by British banks and to derive additional predictions. As down-payment requirements increase, young households with scarce financial resources are priced out by older owners who retain their previous housing for renting when trading up. Recent changes in aggregate housing tenure as well as changes in the number of sales and rentals in areas with different age composition are consistent with the model predictions. The insights presented here inform recent policy discussions about reduced access to home ownership by the young.
    Keywords: Housing markets, housing tenure, credit constraints
    JEL: R30 G21
    Date: 2015–07
  24. By: Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland); Lucas van der Velde (Faculty of Economic Sciences, University of Warsaw); Irene van Staveren (Erasmus University)
    Abstract: Given theoretical premises, there is some ground to expect the gender wage gap adjusted for individual characteristics to be age specific. We rely on a long panel of data from the German Socio-Economic Panel covering the 1984-2008 period. We employ the DiNardo et al. (1996) technique to disentangle cohort and age effects. Our results indicate that the gender wage gap increases over the lifetime, but decreases with time. This finding runs contrary to the hypothesis that it is during the reproductive age that women's wages relative to men's wages suffer most. We suggest explanations for this pattern.
    Keywords: gender wage gap, age, decomposition, non-parametric estimates
    JEL: J31 J71
    Date: 2015
  25. By: Ingebjørg Kristoffersen (Business School, University of Western Australia)
    Abstract: Happiness and satisfaction is often found to be U-shaped in age. Using panel data from the Household Income and Labour Dynamics in Australia (HILDA) survey, this paper finds a significant age effect in life satisfaction data which appears to be robust and to reflect a genuine lifecycle effect. About half of this observed age effect is accounted for by variation in financial satisfaction. Finally, associations between income and financial satisfaction, between wealth and financial satisfaction, and between financial satisfaction and life satisfaction peak in midlife and decline thereafter. This provides strong support for the hypothesis that material concerns are key drivers of lifecycle effects in happiness and satisfaction.
    Date: 2015

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