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on Economics of Ageing |
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| By: | Raquel Fonseca; Thepthida Sopraseuth |
| Abstract: | This paper uses a calibrated dynamic life-cycle model to quantify the long-run distributional impact of two opposite Social Security reforms: modifying the parameters of a defined benefit (DB) plan (such as in France with Ayrault’s reform) or switching to a notional defined contribution (NDC) plan (such as in Italy). Both reforms yield an inequal distribution of welfare losses. Low-skilled workers are the main losers of the reforms. This is so for different reasons in each reform. In the case of Ayrault’s reform, low-skilled individuals delay retirement by 2 years, up to age 62. In switching to a NDC scheme, low-skilled workers’pensions fall substantially. In NDC schemes, inequalities along the working-life are directly translated into inequalities in pension levels. The switch from a DB plan to the Italian reform yields substantial welfare losses, pensions drastically fall, and individuals save more. Since low-skilled workers do not save as much as middle or high-skilled workers, the switch to NDC schemes leads to a more unequal society in terms of asset distribution. |
| Keywords: | Pension reforms, life-cycle heterogeneous-agent model, distributional effects |
| JEL: | E24 H31 H55 J26 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:criacr:1515&r=age |
| By: | Andrea Albanese (Ghent University, Faculty of Economics and Business, SHERPPA); Bart Cockx (Ghent University, Faculty of Economics and Business, SHERPPA, UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES), IZA and CESifo); Yannick Thuy (Ghent University, Faculty of Economics and Business, SHERPPA) |
| Abstract: | In this paper we study the effects on the survival rate in employment of a scheme that facilitates gradual retirement through working time reductions. We use information on the entire labour market career and other observables to control for selection and take dynamic treatment assignment into account. We also estimate a competing risks model considering different (possibly selective) pathways to early retirement. We find that participation in the scheme initially prolongs employment, as participants keep accumulating full pension rights. However, as participants become eligible for early retirement subsequently, these larger financial incentives induce them to leave the labour force prematurely. These adverse incentives are stronger for individuals who reduce their working time most. After two (four) years for men (women), the positive effects reverse. The more favourable effect for women is likely a consequence of their lower opportunities to enter early retirement. The gradual retirement scheme fails the cost-benefit test. |
| Keywords: | Part-time work, older workers, Inverse Probability Weighting, dynamic selection into treatment, endogenous sampling |
| JEL: | J14 C22 J18 J22 |
| Date: | 2015–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2015024&r=age |
| By: | Serap Saritas (School of Oritental and African Studies, University of London) |
| Abstract: | This paper targets providing a detailed review of different modes of pension provision in both public and private sectors in EU countries and the recent transformations through which pension systems have been. Moreover, it is also aimed to address issues related to household’s income levels and poverty alleviation, particularly in the aftermath of the crisis. After outlining the general characteristics of the pension systems, their transformation is explained with reference to financialisation. In this regard, it is argued that pension provision in the EU countries have been heavily financialised in the last two decades which raised critical issues for the future retirees as well as the current ones. More privatised and individualised pension systems as a result of the increase in the financial component of pension schemes and entitlements are riskier. Furthermore, as pension benefits are a main income source for most old people, the replacement of solidarity within the pension provision by individual and financial interests raises crucial issues for the EU member states. |
| Keywords: | Pensions, European Union, Financialisation, Crisis |
| JEL: | H55 I38 J26 L33 G01 |
| Date: | 2014–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper13&r=age |
| By: | Teresa Ghilarducci; Joelle Saad-Lessler; Gayle Reznik (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | When it comes to making contributions to their retirement savings, people's anxiety overcomes inertia. This study finds that while workers may tend toward a path of least resistance, economic shocks, spousal behavior, and changes in pension plan details continuously cause changes in 401(k) contributions. |
| Keywords: | Retirement, 401(k), Pensions, Shocks |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2015-01&r=age |
| By: | Teresa Ghilarducci; Ismael Cid-Martinez (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Published in the Marquette Benefits and Social Welfare Law Review, this paper discusses how the United States' system of voluntary, tax-favored retirement accounts has failed to produce adequate retirement savings. It recommends switching the ineffective and regressive system of tax deductions for contributions to qualified retirement accounts to providing every American with a tax credit. This revenue-neutral policy change would provide an equitable and effective means of ensuring that all working Americans have retirement savings. |
| Keywords: | Retirement, 401(k), Tax, Deductions |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2015-02&r=age |
| By: | Dimitris Christelis; Raquel Fonseca |
| Abstract: | We study transitions in and out of self-employment of older individuals using internationally comparable survey data from 13 OECD countries. We compute selfemployment transitions as conditional probabilities arising from a discrete choice panel data model. We examine the influence on self-employment transitions of labor market policies and institutional factors (employment protection legislation, spending on employment and early retirement incentives, unemployment benefits, strength of the rule of law), as well as individual characteristics like physical and mental health. Selfemployment is strongly affected by government policies: larger expenditures on employment incentives impact it positively, while the opposite is true for expenditures on early retirement and unemployment benefits. |
| Keywords: | self-employment, transitions, ageing, labor policies, panel data |
| JEL: | J21 J24 C4 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:criacr:1516&r=age |
| By: | Alan Gustman (Dartmouth College); Thomas Steinmeier (Texas Tech University); Nahid Tabatabai (Dartmouth College) |
| Abstract: | The composition, wealth, and employment of male veterans and nonveterans are analyzed for four cohorts from the Health and Retirement Study, ages 51 to 56 in 1992, 1998, 2004, and 2010. Half of the two oldest cohorts served in the military. Only 16 percent of the youngest cohort, the only cohort subject to the all-volunteer military, served. One-fifth to one-third of the members of each cohort who served saw combat, mainly in Vietnam and in the Gulf War. Among those 51 to 56 in 1992, veterans were better educated, healthier, wealthier, and more likely to be working than nonveterans. By 2010, 51- to 56-year-old veterans had lost their educational advantage, were less healthy, less wealthy, and less likely to be working than nonveterans. After standardizing in multiple regressions for the influence of major observable characteristics, for the original 1992 HRS cohort, the wealth of veterans is no longer higher than the wealth of nonveterans. In contrast, the wealth of veterans from the youngest cohort, those 51 to 56 in 2010, remains about 10 to 13 percent below the wealth of nonveterans from that cohort. There also is a decline from older to younger cohorts of veterans compared to nonveterans in the probability of being not retired, of working more than 35 hours per week, and in the likelihood of holding a job for more than 10 years. Comparisons are made within the group of veterans by years of service, officer rank and other covariates. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp323&r=age |
| By: | Chichun Fang (University of Michigan); Kenneth Langa (University of Michigan); Helen Levy (University of Michigan); David Weir (University of Michigan) |
| Abstract: | We study the factors that affect the utilization of health care services administered by the Department of Veterans Affairs (VA) and its racial differences. Due to data limitation, previous research in this regard mostly only focuses on veterans who are VA users or at least eligible for VA services. We fill in the gap in literature with a random sample of veterans 51 and older from the Health and Retirement Study. We find that, among all veterans, those who are black and less healthy are more likely to use VA health services. These factors, nevertheless, are no longer statistically significant after the sample is restricted to veterans who are eligible for VA services. We also find that VA health services and services provided through other channels are at least partial substitutes: VA usage drops when a veteran becomes age eligible for Medicare or when a veteran has health insurance coverage through employment. This drop in usage holds not only among all veterans, but also among veterans eligible for VA services. Finally, perception about the quality of services delivered in VA versus non-VA facilities strongly predicts VA services usage. Those who have favorable views toward VA use VA services more, and the results from variance decomposition suggests a majority part of the racial difference in VA usage can be attributed to the racial difference in such perception. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp334&r=age |
| By: | Christina E. Bannier (Department of Corporate Finance, Johannes Gutenberg-Universitaet Mainz); Milena Neubert (Department of Corporate Finance, Johannes Gutenberg-Universitaet Mainz) |
| Abstract: | This study examines the role of actual and perceived ?nancial sophistication (i.e., ?nancial literacy and con?dence) for individuals’ wealth accumulation. Using survey data from the German SAVE initiative, we ?nd strong gender- and education-related di?erences in the distribution of the two variables and their e?ects on wealth: As ?nancial literacy rises in formal education, whereas con?dence increases in education for men but decreases for women, we observe that women become strongly undercon?dent with higher education, while men remain overcon?dent. Regarding wealth accumulation, we show that ?nancial literacy has a positive e?ect that is stronger for women than for men and is increasing (decreasing) in education for women (men). Con?dence, however, supports only highly-educated men’s wealth. When considering di?erent channels for wealth accumulation, we observe that ?nancial literacy is more important for current ?nancial market participation, whereas con?dence is more strongly associated with future-oriented ?nancial planning. Overall, we demonstrate that highly-educated men’s wealth levels bene?t from their overcon?dence via all ?nancial decisions considered, but highly-educated women’s ?nancial planning suffers from their undercon?dence. This may impair their wealth levels in old age. |
| Keywords: | Financial literacy, ?nancial sophistication, con?dence, wealth, household ?nance, behavioral ?nance, gender, formal education |
| JEL: | D91 G11 D83 J26 |
| Date: | 2016–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:1605&r=age |
| By: | Michael D. Hurd (RAND, NBER, MEA and NETSPAR); Susann Rohwedder (RAND and NETSPAR) |
| Abstract: | The income replacement rate (income immediately following retirement divided by income immediately preceding retirement) has become widely used as a measure of economic preparation for retirement. Yet a number of relevant issues are not adequately captured by the replacement rate concept. These include nontraditional transitions from full employment to full retirement, nonparallel transitions by the members of a married couple, and the ability to finance consumption out of savings. In this paper we estimate several measures of the income replacement rate that address some of these issues. Then we compare these income replacement rates with a consumption-based measure of economic preparation that takes into account the ultimate consequences for the retirement-to-death consumption path. Broadly speaking, the measure finds whether a household has, with high probability, the resources to finance a trajectory of spending from shortly following retirement until death. Our preferred measure of the income replacement rate somewhat understates the percentage of single persons adequately prepared for retirement, but it grossly understates the percentage of married persons adequately prepared. Furthermore, there is little relationship between the income replacement rate and our consumption-based measure. The implication is that the income replacement rate is of little use for assessing economic preparation for retirement: the chances that someone with a low income replacement rate is well prepared are not much different from the chances that someone with a high income replacement rate is well prepared. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp332&r=age |
| By: | Sinitsa Arseniy (Department of Economics, Lomonosov Moscow State University) |
| Abstract: | The issues of the development of the Arctic area of Russia that are linked with its importance for the economy of Russia provide the necessity to study its population. The Arctic area population is mostly an urban one, that’s why the special consideration to it should be taken. We examined the size, the age-sex structure and the natural movement of the urban population of the Russia’s Arctic area. As a result, the regions that belong to the Arctic area have the natural population increase, but its losses from the migratory movement are higher, so the population of the Russia’s Arctic area has been decreasing. At the conclusion different ways of the demographic development of the Russia’s Arctic area and some measures of the demographic policy encourage the population increase are discussed |
| Keywords: | Russia’s Arctic area, Arctic cities of Russia, natural population movement, socioeconomic development, demographic policy. |
| JEL: | J10 J11 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:upa:wpaper:0024&r=age |
| By: | Acosta, Olga Lucía; Botiva León, María Alejandra; Ramírez J., Juan Carlos; Uribe, Luis (Comisión Económica para América Latina y el Caribe (CEPAL) United Nations) |
| Abstract: | Este trabajo sugiere algunas rutas alternativas de protección para las poblaciones rurales de Colombia, pensadas desde la caracterización de las familias, sus dinámicas heterogéneas, los riesgos diversos que enfrentan y sus principales necesidades. Se compone de siete secciones de las cuales esta introducción es la primera. La segunda, presenta las principales tendencias demográficas en Colombia, en particular de la población rural, donde se destaca la importancia de considerar las dinámicas poblacionales para la construcción de mejores alternativas de protección. La siguiente sección aporta una clasificación de las diferentes estructuras familiares y de la actividad productiva principal a la que se dedican sus miembros activos. Posteriormente, en la cuarta sección se precisa el concepto de protección social y se presentan sus principales elementos, para abordar en la quinta sección una aproximación al estado actual de la protección social en Colombia y a las principales estrategias —formales o informales— a las que recurren los hogares rurales para protegerse. En seguida, se exponen las razones por las cuales los instrumentos existentes no han sido efectivos y finalmente, se ofrecen algunos elementos para la construcción de rutas de protección para la población rural, así como su clasificación en algunas tipologías básicas. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col028:39659&r=age |
| By: | Yonatan Ben-Shalom; Jennifer R. Tennant; David C. Stapleton |
| Abstract: | Older veterans are facing increasing challenges in the labor market, and further research is needed to determine whether these challenges are primarily related to health, a growing skills gap, or poorly-aligned incentives. |
| Keywords: | Disability Benefits, Veterans, Department of Veterans Affairs, Social Security Administration, Cognitive Disability |
| JEL: | I J |
| Date: | 2016–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:018e1829d9eb4e5ea124de8c95c4d34b&r=age |