nep-age New Economics Papers
on Economics of Ageing
Issue of 2015‒08‒19
24 papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The Challenge of Pension Reform in Georgia: Non-Contributory Pensions and Elderly Poverty By Tamila Nutsubidze; Khatuna Nutsubidze
  2. A Life-Span Perspective on Life Satisfaction By Paula Thieme; Dennis A.V. Dittrich
  3. Income tax and retirement schemes By Philippe Choné; Guy Laroque
  4. How Have Employment Transitions for Older Workers in Germany and the UK Changed? By David Wright
  5. What can we do to help? Adopting age-friendly banking to improve financial well-being for older adults By Abood, Maya; Zdenek, Robert; Kali, Karen
  6. How Teachers Respond to Pension System Incentives: New Estimates and Policy Applications By Shawn Ni; Michael Podgursky
  7. From Me to You? How the UK State Pension System Redistributes By Rowena Crawford; Soumaya Keynes; Gemma Tetlow
  8. Fertility, Longevity and International Capital Flows By Zsofia Barany; Nicolas Coeurdacier; Stéphane Guibaud
  9. Absenteeism, Pension Reforms and Grandmothers By Flavia Coda Moscarola; Elsa Fornero; Steinar strom
  10. Are Japanese Men of Pensionable Age Underemployed or Overemployed? By USUI Emiko; SHIMIZUTANI Satoshi; OSHIO Takashi
  11. Retirement sorted? The adequacy and optimality of wealth among the near-retired By Rowena Crawford; Cormac O'Dea
  12. Title: Strategic Intelligence Monitor on Personal Health Systems Phase 3 (SIMPHS 3) – SPARRA (United Kingdom) Case Study Report By Francisco Lupiañez-Villanueva; Alexandra Theben
  13. Do Catch-Up Contributions Increase 401(k) Saving? By Qi Guan; Matthew S. Rutledge; April Yanyuan Wu; Francis M. Vitagliano
  14. Cause-of-Death Mortality: What Can Be Learned From Population Dynamics? By Séverine Arnold; Alexandre Boumezoued; Héloïse Labit Hardy; Nicole El Karoui
  15. The Relationship Between Automatic Enrollment and DC Plan Contributions: Evidence from a National Survey of Older Workers By Barbara A. Butrica; Nadia S. Karamcheva
  16. Does care to dependent elderly people living at home increase their mental health? By Thomas Barnay; Sandrine Juin
  17. A State-Space Estimation of the Lee-Carter Mortality Model and Implications for Annuity Pricing By Man Chung Fung; Gareth W. Peters; Pavel V. Shevchenko
  18. Revealed preference and consumption behaviour at retirement By Peter Levell
  19. Le déficit de cycle de vie en France: une évaluation pour la période 1979-2011 By d'Albis, Hippolyte; Bonnet, Carole; Navaux, Julien; Pelletan, Jacques; Wolff, François charles
  20. Early Life Circumstances and Life Cycle Labor Market Outcomes By Manuel Flores; Pilar Garcia-Gomez; Adriaan Kalwij
  21. Are 401(k) Investment Menus Set Solely for Plan Participants? By Veronika K. Pool; Clemens Sialm; Irina Stefanescu
  22. Public Education, Pension and Debt Policy By Yasuoka, Masaya; Oguro, Kazumasa
  23. Options to Narrow New Zealand’s Saving – Investment Imbalance By Anne-Marie Brook
  24. Mortality: a statistical approach to detect model misspecification By Jean-Charles Croix; Frédéric Planchet; Pierre-Emmanuel Thérond

  1. By: Tamila Nutsubidze; Khatuna Nutsubidze
    Abstract: Georgia, a country characterized by an aging population with a high incidence of poverty and limited public financial resources, offers virtually complete non-contributory basic pension coverage. The basic pension has, to date, proved effective in dealing with poverty arising from political instability, military conflicts, economic deterioration, transition to a market economy, emigration of its younger population, and aging. But Georgia’s fiscal constraints and aging population also highlight the importance of developing and improving the pension system, in order to ensure its sustainability. Since 2012 the Georgian government has put forth a systemic reform proposal – a compulsory pension insurance – including the implementation of contributory pension schemes to supplement the basic non-contributory pension. While the proposal is a promising start, it alone would not be enough to ensure that the government’s fiscal burden remains reasonable, while maintaining the basic pension system’s long-term adequacy and flexibility to adapt to the evolving demographic environment. This paper presents policy reform choices, which suggest that, in Georgia, pension reform might also include increasing statutory retirement ages and reducing the generosity of benefits through means testing. These policy reform options would involve difficult tradeoffs, which are also described in this paper. Although the paper focuses on the Georgian non-contributory basic pension, its poverty reduction effect and policy reform options, the case of the Georgian non-contributory basic pension might hold value for some low- and middle-income countries that are considering implementation or expanding coverage of non-contributory pensions.
    Date: 2015–07
  2. By: Paula Thieme; Dennis A.V. Dittrich
    Abstract: The German population is ageing due to decreasing birth rates and increasing life expectancy. To sustain the German pension system, legal retirement age is increased step by step to 67 years. This raises questions about how to enable and motivate older individuals to work that long. Hence, it is important to understand whether they represent a homogeneous group that can be addressed through specific measures and instruments. Life-span theory points to systematic changes as well as increased heterogeneity with age. For example, work motivation does not generally decline with age but becomes increasingly task-specific, depending on changing life goals and individual adaptation processes in adult development. In this empirical study we analyse age heterogeneity with regard to current life satisfaction and life satisfaction domains (measured as satisfaction with work, income, family and health) that represent personal utilities individuals strive for. For our analysis we use data collected as part of a representative German longitudinal data study (SOEP). We find increasing heterogeneity in current life satisfaction, satisfaction with work, family life, and health with age. Thus, common mean level analyses on age effects yield only limited informative value. The heterogeneity of older adults should be taken into account when motivating and developing older workers.
    Keywords: Life satisfaction, heterogeneity, life-span, older workers, ageing
    Date: 2015
  3. By: Philippe Choné (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Guy Laroque (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)
    Abstract: This article aims at understanding the interplay between pension schemes and tax instruments. The model features extensive labor supply in a stationary environment with overlapping generations and perfect financial markets. Compared with the reference case of a pure taxation economy, we find that taxes become more redistributive when the pension instrument is available, while pensions provide incentives to work.
    Date: 2014–03
  4. By: David Wright
    Abstract: Extending working life is an objective for many nations. However, the UK government has recently reported only modest improvement “compared to many nations”. A comparison of European, Labour Force Surveys show that Germany has reversed early retirement much faster than the UK since 2003. This was not forecast by previous researchers. In particular, Ebbinghaus’ influential cross-national analysis of early retirement, published in 2006, had predicted that liberal welfare states regimes like the UK would react faster than conservative ones like Germany. A review of changes to pensions and employment policies suggests the UK puts more emphasis on recruitment of older workers, flexible working and gradual retirement while Germany puts more emphasis on retention of older workers through age-management and employment protection. The paper compares the employment transitions of older workers using data covering 1993 to 2013 from the longitudinal surveys British Household Panel Survey, Understanding Society and the German Socio-Economic Panel. It finds little evidence for the recruitment of older workers or gradual retirement in either the UK or Germany and concludes it was the greater employment protection for older workers in Germany that enabled the employment rate for older workers to increase even during the recent recession.
    Keywords: Older workers, United Kingdom, Germany
    JEL: J21
    Date: 2015
  5. By: Abood, Maya (California Coalition for Rural Housing); Zdenek, Robert (National Community Reinvestment Coalition); Kali, Karen (National Community Reinvestment Coalition)
    Abstract: This paper explores age-friendly banking products and services that better protect and preserve the assets of an aging population. In order to examine the unique financial needs and increase the financial well-being of low-income older adults, the California Coalition for Rural Housing (CCRH) partnered with the National Community Reinvestment Coalition (NCRC) to conduct an intensive study of over 400 low-income tenants living in subsidized senior housing. CCRH and NCRC recommend that banks develop more affordable banking products for seniors on fixed-incomes, assist customers in applying for public benefits, proactively address financial abuse and fraud, and provide in-person customer service and better early retirement planning. Financial institutions can incorporate these recommendations into the development of effective Age-Friendly Banking initiatives.
    Date: 2015–01–16
  6. By: Shawn Ni (University of Missouri - Columbia); Michael Podgursky (University of Missouri - Columbia)
    Abstract: Rising costs of public employee pension plans are a source of ?scal stress in many cities and states and have led to calls for reform. To assess the economic consequences of plan changes it is important to have reliable statistical models of employee retirement behavior. The authors estimate a structural model of teacher retirement using administrative panel data. A Stock-Wise option value model provides a good ?t to the data and predicts well out-of-sample on the e?ects of pension enhancements during the 1990s. The structural model is used to simulate the e?ect of alternatives to the current de?ned bene?t plan.
    Keywords: teacher pensions, school staffing, school finance.
    JEL: I21 J26 J38
    Date: 2015–08
  7. By: Rowena Crawford (Institute for Fiscal Studies); Soumaya Keynes (Institute for Fiscal Studies); Gemma Tetlow (Institute for Fiscal Studies)
    Abstract: The redistributive objectives of the UK state pension system have often been somewhat ambiguous, and have changed over time as different governments have come and gone. In this paper, we use detailed data on households’ histories of employment, earnings and contributions to the National Insurance (NI) system to examine the degree of intragenerational redistribution achieved by the UK state pension system for the cohort born in the 1930s. We also estimate what redistribution could have been achieved by alternative stylised state pension systems, which approximate the steady-state version of some of the main reforms that have been implemented in the UK over the last 40 years. We find that the majority of state pension spending under all the systems we consider reflects a transfer of money across individuals’ lifetimes, rather than between different individuals in the cohort. Comparisons between the different state pension systems, in terms of the extent of redistribution they imply, depend crucially on the stance taken as to whether or not individuals in couples pool their resources. These findings will be presented at a briefing on 9 September, alongside several other pieces of work which shed light on how financial preparedness for retirement differs across cohorts and important differences within cohorts.
    Date: 2014–08
  8. By: Zsofia Barany (ECON - Département d'économie - Sciences Po); Nicolas Coeurdacier (ECON - Département d'économie - Sciences Po); Stéphane Guibaud (ECON - Département d'économie - Sciences Po)
    Abstract: The neoclassical growth model predicts large capital flows towards fast-growing emerging countries. We show that incorporating fertility and longevity into a lifecycle model of savings changes the standard predictions when countries differ in their ability to borrow inter-temporally and across generations through social security. In this environment, global aging triggers capital flows from emerging to developed countries, and countries’ current account positions respond to growth adjusted by current and expected demographic composition. Data on international capital flows are broadly supportive of the theory. The fact that fast-growing emerging countries are also aging faster, while having less developed credit markets and pension systems, explains why they are more likely to export capital. Our quantitative multi-country overlapping generations model explains a significant fraction of the patterns of capital flows, across time and across developed and emerging countries.
    Date: 2015–06
  9. By: Flavia Coda Moscarola (University of Turin and CeRP-Collegio Carlo Alberto); Elsa Fornero (University of Turin and CeRP-Collegio Carlo Alberto); Steinar strom (The Ragnar Frisch Centre for Economic Research)
    Abstract: Both economic and epidemiological literature have shown that perceived high strain at work and lack of social infrastructures are good predictors of sick-leave. The latter is particularly relevant in (Mediterranean) countries where facilities for children and LTC services are relatively scarce and women are frequently asked to fill the gap. The Italian 2011 pension reform, approved under the threat of a financial crisis, significantly restricted age and seniority requirements for retirement, especially for women in private employment, who still enjoyed a much more favorable treatment than men and women in public service. We investigate whether (employed) older Italian women reacted to the postponement of retirement by increasing their recourse to sick-leave. The empirical analysis, based on a noteworthy administrative data set provided by the Italian Social Security Agency, offers unequivocal evidence that this has indeed been the case, in particular for grandmothers.
    Date: 2015–07
  10. By: USUI Emiko; SHIMIZUTANI Satoshi; OSHIO Takashi
    Abstract: We investigate how Japanese men aged 60-74 adjust their workforce attachment after beginning to receive a public pension. Men who were employees at age 54 gradually move to part-time work or retire after beginning to receive pension benefits; those who continue working are more likely to be underemployed. Men self-employed at age 54, however, neither retire nor reduce their working hours even after beginning to receive pension benefits; these men are more likely to be overemployed. In contrast, U.S. men retire or move to part-time when they first claim Social Security; those who continue working as employees after Social Security starts are unlikely to be either over- or underemployed. Therefore, unlike U.S. men, Japanese men are not choosing the optimal pensionable age and labor hours to maximize their intertemporal utility.
    Date: 2015–08
  11. By: Rowena Crawford (Institute for Fiscal Studies); Cormac O'Dea (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: Much of the focus of the UK pensions policy debate over the past decade has been on the adequacy (or otherwise) of private retirement saving. In this paper, we present the first assessment of the optimality of the retirement resources of English couple households born in the 1940s. Here, ‘optimal’ wealth holdings are those that allow households to enjoy the same level of living standards in both working life and retirement. We use a life-cycle model of consumption and saving to calculate this level of wealth, and compare that with how much wealth households are observed to hold. We find that the majority of households hold more wealth than our model suggests is optimal and that this would still be true even if housing wealth were excluded from observed wealth holdings. A comparison of this approach with the replacement rate approach commonly used to assess the adequacy of households’ retirement resources suggests that using a simple replacement rate benchmark could give a misleading picture of households’ preparedness for retirement as it cannot capture the vast heterogeneity in households’ circumstances. This paper will be presented at the 'Are you prepared for retirement?' conference this afternoon.
    Date: 2014–09
  12. By: Francisco Lupiañez-Villanueva (Open Evidence); Alexandra Theben (Open Evidence)
    Abstract: SPARRA/ACP is an integrated care management approach based on two main components: the predictive model “Scottish Patient at Risk of Readmission and Admission” (SPARRA) which aims to measure the risk of hospital admission of a targeted patient and an Anticipatory Care Planning (ACP) approach which designs, implements and monitors the most suitable intervention according to the degree of hospital admission risk of the targeted patient. Together they form the SPARRA/ACP Patient-Centric Integrated Care approach that is being implemented in several communities in Scotland, promoted by the Scottish Government and NHS Scotland as part of its strategy of national health care system renewal.
    Keywords: SIMPHS, eHealth, Remote Monitoring, ageing, integrated care, independent living, case studies, facilitators, governance, impact, drivers, barriers, integration, organisation
    JEL: I11 I18 O33 O38
    Date: 2015–07
  13. By: Qi Guan; Matthew S. Rutledge; April Yanyuan Wu; Francis M. Vitagliano
    Abstract: Changes in the retirement landscape – rising life ex­pectancy, declining Social Security replacement rates, and vanishing traditional pensions – increase the need for individuals to save. The tax code encourages individuals to save in 401(k) plans by allowing tax-advantaged contributions up to specified limits. In 2001, policymakers increased these limits for all ages and established a new catch-up provision for work­ers age 50 or older, which allows them to contribute much more. This brief, which summarizes a recent study, assesses the extent to which the catch-up provision has increased 401(k) contributions. The discussion is structured as follows. The first section introduces the catch-up provision. The second section defines the data and the sample used in the analysis. The third section examines the characteristics of the group most likely to take advantage of the provision: the small percentage of workers who previously contributed near the maximum level. The fourth section analyzes how contributions changed after the adoption of the catch-up provision. The final section concludes that only those near the maximum respond to increased tax incentives to save in 401(k)s, which is consistent with previous research.
    Date: 2015–07
  14. By: Séverine Arnold (Département de Sciences Actuarielles, Université de Lausanne - UNIL - Université de Lausanne - Université de Lausanne); Alexandre Boumezoued (LPMA - Laboratoire de Probabilités et Modèles Aléatoires - CNRS - UP7 - Université Paris Diderot - Paris 7 - UPMC - Université Pierre et Marie Curie - Paris 6); Héloïse Labit Hardy (Département de Sciences Actuarielles, Université de Lausanne - UNIL - Université de Lausanne - Université de Lausanne); Nicole El Karoui (LPMA - Laboratoire de Probabilités et Modèles Aléatoires - CNRS - UP7 - Université Paris Diderot - Paris 7 - UPMC - Université Pierre et Marie Curie - Paris 6)
    Abstract: This paper analyses cause-of-death mortality changes and its impacts on the whole population evolution. The study combines cause-of-death analysis and population dynamics techniques. Our aim is to measure the impact of cause-of-death reduction on the whole population age structure, and more specifically on the depdendency ratio which is a crucial quantity for pay-as-you-go pension systems. Whereas previous studies on causes of death focused on mortality indicators such as survival curves or life expectancy, our approach provides additional information by including birth patterns. As an important conclusion, our numerical results based on French data show that populations with identical life expectancies can present important differences in their age pyramid resulting from different cause-specific mortality reductions. Sensitivities to fertility level and population flows are also given.
    Date: 2015–05–28
  15. By: Barbara A. Butrica; Nadia S. Karamcheva
    Abstract: Automatic enrollment has been widely embraced for raising employee participation in 401(k) plans. However, the empirical evidence is based on data with limitations that, up until now, have prevented researchers from extrapolating the effects of automatic enrollment to the broader population of workers. This paper reexamines the determinants of 401(k) participation and contributions in the presence of automatic enrollment using nationally representative data from the Health and Retirement Study (HRS) for 2006 through 2012. The results confirm previous findings that automatic enrollment is associated with a higher proportion of workers included in DC plans; however, automatically enrolled workers are less likely to contribute to their DC plans than voluntarily enrolled workers. Auto enrollment is also associated with lower employee contribution amounts and rates. However, the employers of auto-enrolled workers are more likely to contribute to their employees’ accounts than are the employers of voluntarily enrolled workers. Additionally, employer contribution amounts and rates are higher among workers who are automatically enrolled. Even so, the combined effect is that the retirement accounts of automatically enrolled older workers receive, on average, $900 less in combined annual contributions and have contribution rates that are 1.6 percentage points lower than those of voluntarily enrolled workers. The paper found that: - Automatic enrollment is associated with a higher probability of being included in a DC plan. - On average, workers who are automatically enrolled in a DC plan tend to be less likely to contribute positive amounts than those who opt in. - However, the employers of automatically enrolled workers are more likely to make contributions and to contribute, on average, higher amounts and a higher percentage of their employees’ earnings. - The correlation between automatic enrollment and combined (employer and employee) contribution amounts and contribution rates, however, is still negative, despite controlling for a range of factors. The policy implications of the findings are: - Auto enrollment could do a better job of boosting overall contribution levels among participants. - Possible ways to achieve this might be by offering a more generous employer match and by using auto escalation. - More research and better data are needed to assess the potential impact on retirement plan contributions of implementing automatic enrollment features in DC plans on a national scale.
    Date: 2015–07
  16. By: Thomas Barnay (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS); Sandrine Juin (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS)
    Abstract: In France, the number of dependent elderly should d ouble by 2060. It is thus important to address the well-being of this growing share of the population. This work aims at estimating the effects of informal care and formal care on the mental health of dependent elderly. Furthermore, we allow the effect of care to vary de pending on the level of dependence, the gender of the dependent elderly and the relationship between the elderly and the primary informal caregiver. Many theoretical models include a production function of health which has two inputs, formal care and informal care but t his function has not been the subject of many empirical studies. In order to estimate the health production function, we use the French Disability and Health Survey (2008). Using a sample of 4,067 dependent elderly, three equations are jointly estimated by the maximum-likelihood method: mental health, informal care and formal care. Correlated residuals partially take into account the relationship between formal and informal cares and the reverse causality of mental health on care received. We use two mental health indicators: depression and the Mental-Health Inventory (MHI-5). The results show a positive effect of informal care on mental health, for slightly dependent elderly, for individuals receiving care from friends or neighbors and for men receiving care from a daughter or from siblings. Formal care decreases the risk of depression and improves the MHI-5 of elderly dependent people, this last effect being higher for women.
    Date: 2015–01–07
  17. By: Man Chung Fung; Gareth W. Peters; Pavel V. Shevchenko
    Abstract: In this article we investigate a state-space representation of the Lee-Carter model which is a benchmark stochastic mortality model for forecasting age-specific death rates. Existing relevant literature focuses mainly on mortality forecasting or pricing of longevity derivatives, while the full implications and methods of using the state-space representation of the Lee-Carter model in pricing retirement income products is yet to be examined. The main contribution of this article is twofold. First, we provide a rigorous and detailed derivation of the posterior distributions of the parameters and the latent process of the Lee-Carter model via Gibbs sampling. Our assumption for priors is slightly more general than the current literature in this area. Moreover, we suggest a new form of identification constraint not yet utilised in the actuarial literature that proves to be a more convenient approach for estimating the model under the state-space framework. Second, by exploiting the posterior distribution of the latent process and parameters, we examine the pricing range of annuities, taking into account the stochastic nature of the dynamics of the mortality rates. In this way we aim to capture the impact of longevity risk on the pricing of annuities. The outcome of our study demonstrates that an annuity price can be more than 4% under-valued when different assumptions are made on determining the survival curve constructed from the distribution of the forecasted death rates. Given that a typical annuity portfolio consists of a large number of policies with maturities which span decades, we conclude that the impact of longevity risk on the accurate pricing of annuities is a significant issue to be further researched. In addition, we find that mis-pricing is increasingly more pronounced for older ages as well as for annuity policies having a longer maturity.
    Date: 2015–08
  18. By: Peter Levell (Institute for Fiscal Studies)
    Abstract: This paper sets out revealed preference tests for different models of consumption behaviour over retirement that we applied to a Spanish consumption panel dataset. We reject the perfect foresight model both with separable preferences and allowing for preference change. The first order conditions for the life-cycle model allowing for uncertainty do not provide very strong restrictions on possible choices. In fact they are no stronger than those implied by the most basic revealed preference requirement: GARP. We then go on to investigate the patterns of deviations from a perfectly smoothed marginal utility of wealth and ask whether they fit the predictions of the life-cycle model. We find a tendency of these to increase over time, suggesting consumption falls more than we'd expect. After considering various possible explanations, we settle on non-rational behaviour as the most plausible.
    Date: 2014–10
  19. By: d'Albis, Hippolyte; Bonnet, Carole; Navaux, Julien; Pelletan, Jacques; Wolff, François charles
    Abstract: This article presents the age profiles of consumption and labor incomes computed for France following the methodology of the National Transfer Accounts. The life-cycle deficit, which is obtained by the difference between the consumption and income profiles, permits to measure the contribution of active age classes to the financing of the consumption of dependent age classes. Labor income and consumption profiles are decomposed at both the individual and the aggregate levels and their evolution between 1979 and 2011 are presented. International comparisons are also proposed.
    Keywords: National accounts; generations;
    JEL: J1
    Date: 2015–06–15
  20. By: Manuel Flores (OECD, France); Pilar Garcia-Gomez (Erasmus University Rotterdam, the Netherlands); Adriaan Kalwij (Utrecht University, the Netherlands)
    Abstract: We investigate how early life circumstances—childhood health and socioeconomic status (SES)—are associated with labor market outcomes over an individual’s entire life cycle. A life cycle approach provides insights not only into which labor market outcomes are associated with adverse childhood events but also into whether these associations show up early or only later in working life, and whether they vanish or persist over the life cycle. The analysis is conducted using the Survey of Health, Aging and Retirement in Europe, which contains retrospective information on early life circumstances and full work histories for over 20,000 individuals in thirteen European countries. We find that the associations between early life circumstances and (accumulated) labor market outcomes vary over an individual’s life cycle. For men and women, the effect of childhood SES on lifetime earnings accumulates over the life cycle through the associations with both working years and annual earnings. Moreover, for men this association with lifetime earnings reverses sign from negative to positive over their working life. We also find a smaller, positive long-term association between childhood health and lifetime earnings operating mainly through annual earnings and only to a lesser extent through working years, and which is not present at the beginning of the working life for women. Most of these life cycle profiles differ between European country-groups. Finally, for women we find a so-called buffering effect, i.e. that a higher parental SES reduces the negative impact of poor health during childhood on accumulated earnings over the life cycle.
    Keywords: Early life circumstances; lifetime earnings; life cycle; SHARE
    JEL: D10 I14 J14 J24 J31 O15
    Date: 2015–08–06
  21. By: Veronika K. Pool; Clemens Sialm; Irina Stefanescu
    Abstract: Mutual fund companies play a critical part in the nation’s retirement saving system. They manage about 56 percent of the $4.7 trillion in assets held by 401(k)s and other defined contribution plans. At the same time, these fund companies often help sponsors manage the plans and set the menu of investment options. This dual role creates conflicting incentives. On the one hand, fund companies are hired by plan sponsors – and required by law – to create menus that serve the interests of plan participants. On the other hand, they also have an incentive to include their own proprietary funds on the menu, even when more suit­able options are available from other fund families. This brief, based on a study forthcoming in The Jour­nal of Finance, investigates the extent of this conflict between the interests of mutual fund companies and plan participants. The brief proceeds as follows. The first section describes the study design and the data. The second section investigates whether mutual fund companies tend to influence 401(k) menus in ways that favor their own funds, especially their poor-quality funds. The third section explores whether participants shift their savings to offset any bias found in menu decisions, especially decisions that favor the fund company’s sub-par performers. The fourth section considers whether these sub-par funds continue to produce sub-par returns. The final section concludes that mutual fund company involvement in 401(k) menu decisions appears to favor the company’s own funds, with potential adverse effects on the retirement savings of plan participants.
    Date: 2015–08
  22. By: Yasuoka, Masaya; Oguro, Kazumasa
    Abstract: Our paper sets the model with public education investment, pension bene t and public debt stock and examines how tax burden and expenditure share between education policy and pension policy a ect the public debt stock ratio to Gross Domestic Product (GDP). Moreover, our paper considers the target policy to be constant public debt ratio to GDP over time. Based on Domar condition, our paper examines scal sustainability and how tax and expenditure policy a ect on the public debt stock ratio to GDP in the long run. The change of expenditure share between public education investment and pension bene t can decrease the public debt ratio to GDP. Moreover, our paper derives two positive income tax rate to hold constant public debt ratio to GDP. Thanks to low tax rate, physical capital accumulation increases and then both income growth and income level increase.
    Keywords: Public Debt, Human Capital, Pension, Education Investment
    JEL: H60 H20 E60 I21
    Date: 2015–07
  23. By: Anne-Marie Brook (The Treasury)
    Abstract: The Treasury has, at times, suggested giving greater consideration to reforms to narrow the Saving-Investment gap. However, there has been less discussion of specific policy options for doing this. This paper helps to fill the gap by asking what policy reforms could help to narrow the Saving-Investment gap in New Zealand. Lower per capita growth in the capital stock overall does not seem a desirable goal, given the relatively capital shallow nature of the New Zealand economy. This suggests a need for a significantly higher rate of national saving. Previous recommendations to boost national saving have often focused on higher government saving. This paper agrees that higher public saving is desirable but argues that efforts to boost private sector saving rates are at least as important. Potential policy options to boost private sector saving include tax policy changes, a range of different retirement income policy settings and policies that affect the housing market. Internationally, New Zealand stands out as being one of the only OECD countries where individuals do not have access to any significantly tax-preferred saving vehicles other than property. Tax reform thus has potential to both raise the level of saving and improve its composition. One option may be to reduce the tax rate on capital income, such as by extending the existing PIE regime, although such a reform would need to be packaged together with other tax changes to mitigate the equity and revenue impacts. Another option would be to move toward a private save-as-you-go (SAYGO) pension system, which would pair compulsory savings with means-testing of New Zealand Superannuation (NZS). At the same time, there is a growing body of evidence pointing to the effectiveness of default policies that nudge individuals to save more (as KiwiSaver does). Finally, a number of policies are considered that would dampen house price inflation, which may help to boost private saving.
    Keywords: Saving; Investment; Tax; Pension policy
    JEL: D9 E21 H55 O16
    Date: 2014–11
  24. By: Jean-Charles Croix (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1); Frédéric Planchet (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1); Pierre-Emmanuel Thérond (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1)
    Abstract: The Solvency 2 advent and the best-estimate methodology in future cash-flows valuation lead insurers to focus particularly on their assumptions. In mortality, hypothesis are critical as insurers use best-estimate laws instead of standard mortality tables. Backtesting methods, i.e. ex-post modelling validation processes , are encouraged by regulators and rise an increasing interest among practitioners and academics. In this paper, we propose a statistical approach (both parametric and non-parametric models compliant) for mortality laws backtesting under model risk. Afterwards, a specification risk is introduced assuming that the mortality law is subject to random variations. Finally, the suitability of the proposed method will be assessed within this framework.
    Date: 2015

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