nep-age New Economics Papers
on Economics of Ageing
Issue of 2016‒06‒25
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Use of and attitudes towards new technologies of persons 50+ in Austria By Michael Radhuber
  2. Sustainability of pensions schemes : building a smooth automatic balance mechanism with an application to the US social security By Frédéric Gannon; Florence Legros; Vincent Touze
  3. Aging, Pensions, and Growth By Tetsuo Ono
  4. Saving and taxation in a voluntary pension system: Toward an agent-based model By Balazs Kiraly; Andras Simonovits
  5. Taxing pensions and retirement benefits in Germany By Börsch-Supan, Axel; Quinn, Christopher
  6. Beyond occupation : the evolution of gender segregation over the life course By Ruiz-Castillo, Javier; Mora, Ricardo; Guinea-Martin, Daniel
  7. Real and Imagined Threats to the Welfare State By LINDERT, Peter H.
  8. A new model for interdependent durations with an application to joint retirement By Bo Honoré; Áureo de Paula
  9. Éclairages de l’enquête Patrimoine sur les comportements de rachat en assurance-vie. By Frey L.
  10. Job Insecurity, Unemployment Insurance and On-the-Job Search: Evidence from Older American Workers By Italo Gutierrez

  1. By: Michael Radhuber
    Abstract: A dynamic new field for health related technologies has emerged over the past decade. Many innovations aim at assisting elderly persons in monitoring and managing their personal health status. Other technologies support these persons in their activities of daily life, and make them feel safe and shepherded while still being able to live on their own. In times of ageing populations and stressed health care systems such technologies provide an interesting alternative to rather classic approaches in health and care services. New technologies become always more accessible to ordinary citizens. In many cases ownership of smartphones or tablets is sufficient for being able to participate in these benefits. But while smartphones and tablets are becoming ever cheaper and technically more sophisticated, attitudes of human beings towards new technologies only slowly change. One major problem is that many older individuals are eager to use new technologies and – especially for persons with disabilities – technologic innovations are becoming ever more relevant in their daily life; however due to age related changes in health and cognitive skills, these people are confronted with an invisible “technological barrier” (see Friesdorf et al., 2000; Czaja and Lee, 2007). This article aims to shed a first light on the mindset of persons 50+ in Austria towards new health and care technologies by looking at the relationship between gender, age, educational background, geographic living area and attitudes towards new technologies.
    Keywords: Personal computer, Tablet, Smartphone, Ageing, Health, Medical device, Elderly care, Self help, information technology, population ageing,
    JEL: J10 I18 H55 O30
    Date: 2016–02
  2. By: Frédéric Gannon (EconomiX); Florence Legros (Laboratoire Structure et Dynamiques Financières); Vincent Touze (OFCE)
    Abstract: We build a "smooth" automatic balance mechanism (S–ABM) which would result from an optimal tradeoff between increasing the receipts and reducing the pension expenditures. The S- ABM obtains from minimizing an intertemporal discounted quadratic loss function under an intertemporal budget balance constraint. The main advantage of our model of "optimal" adjustment is its ability to analyse various configurations in terms of automatic balance mechanisms (ABM) by controlling the adjustment pace. This S-ABM permits to identify two limit cases: the “flat Swedish-type ABM” and the “fiscal-cliff US- type ABM”. These cases are obtained by assuming very high adjustment costs on revenue (implying only pension benefit adjustment) and by choosing particular sequences of publicdiscount rates. We then apply this ABM to the case of the United States Social Security to evaluate the adjustments necessary to ensure financial solvency. These assessments are made under various assumptions about forecast time horizon, public discount factorand weighting of social costs associated with increased receipts or lower expenditures
    Keywords: Pension Scheme sustainablity; Automatic balance mechanisms; Dynamic programming
    JEL: C61 H55 H68
    Date: 2016–05
  3. By: Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: This study presents an endogenous growth, overlapping-generations model fea- turing probabilistic voting over public pensions. The analysis shows that (i) the pension-GDP ratio increases as life expectancy increases in the presence of an an- nuity market, while it may show a hump-shaped pattern in its absence; (ii) the growth rate is higher in the presence of the annuity market than its absence, but the presence implies an intergenerational trade-off in terms of utility.
    Keywords: Economic Growth; Population Aging; Probabilistic Voting; Public Pension; Annuity Market
    JEL: D70 E24 H55
    Date: 2014–04
  4. By: Balazs Kiraly (Institute of Physics of Budapest University of Technology, Budapest); Andras Simonovits (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences also Mathematical Institute of Budapest University of Technology, Budapest)
    Abstract: Mandatory pension systems only partially replace old-age income, therefore the government also operates a voluntary pension system, where savings are matched by government grants. Accounting for the resulting tax expenditure, our models describe the income flow from shortsighted to farsighted workers. 1. In rational models, explicit results are obtained, showing the limited learning of shortsighted workers. 2. In agent-based models, this learning is improved and this raises the shortsighted workers' saving and reduces perverse income redistribution.
    Keywords: life-cycle savings, overlapping generations, mandatory pensions, voluntary pensions, agent-based models
    JEL: H55 D91
    Date: 2016–02
  5. By: Börsch-Supan, Axel; Quinn, Christopher (Munich Center for the Economics of Aging (MEA))
    Abstract: The paper motivates and describes the tax treatment of German retirement benefits and pensions after the 2005 reform initiated by the German Federal Constitutional Court. The main question is whether this reform has produced a “level playing field†among the many instruments generating retirement income in Germany. The paper briefly outlines rational principles for the taxation of retirement benefits and pensions and compares these with current practice in Germany and abroad.
    Date: 2015–11–27
  6. By: Ruiz-Castillo, Javier; Mora, Ricardo; Guinea-Martin, Daniel
    Abstract: We argue that gender segregation stems from sources beyond occupation, the traditional domain of study: women and men differ not only in their occupational allocation but also in their time involvement in paid work, in their decisions to participate in the labor market at all and in their retirement age. We pool 21 Labour Force Surveys for the United Kingdom to measure and compare these various forms of segregation (occupational, temporal and economic) over the 1993-2013 period (n = 1,815,482). The analysis relies on the Strong Group Decomposability property of the Mutual Information index to identify the evolution of segregation over the life course net of cohort and period effects. There are two main findings. First, over the life course, the evolution of gender segregation parallels the inverted U-shaped pattern of the employment rate. When workers are younger, measures of all concepts of segregation are small. Then, gender segregation increases due to a combination of economic and time-related components. After the prime childbearing years, gender segregation remains fairly stable for approximately 15 years, sustained by expanding occupational segregation; finally, in the later years, gender segregation decreases substantially. Second, gender segregation is consistently 20% higher than occupational segregation after the teenage years. However, as much as 44% of gender segregation at age 35 and 52% at age 64 would remain even if occupations were completely desegregated. These ages correspond to two key stages in the life course: career and family building on the one hand and retirement on the other.
    Keywords: segregation; retirement, segregation; parttime; occupations; Mutual Information index; life course; gender; employment
    Date: 2016–06
  7. By: LINDERT, Peter H.
    Abstract: The traditionally, and wrongly, imagined vulnerabilities of the welfare state are economic. The true threats are demographic and political. The most frequently imagined threat is that the welfare state package reduces the level and growth of GDP. It does not, according to broad historical patterns and non-experimental panel econometrics. Large-budget welfare states achieve a host of social improvements without any clear loss of GDP. The paper elaborates on how this "free lunch" is gained in practice. Other threats to the welfare state are more real, however. Two demographic-political clouds loom on the horizon in the twenty-first century, though neither cloud reveals an economic flaw specific to the welfare state. One cloud is the rise of anti-immigrant backlash. If combined with heavy refugee inflows, this could destroy future public support for universalist welfare state programs, even though they seem to remain economically sound. The other, and more certainly rain-bearing, cloud is that population aging poses a serious problem for financing old age, either publicly or privately. Pension deficits threatens to crowd out more productive social spending. Only a few countries have faced this issue very well.
    JEL: H10 H50 N32 N34
    Date: 2016–06
  8. By: Bo Honoré (Institute for Fiscal Studies and Princeton); Áureo de Paula (Institute for Fiscal Studies and University College London)
    Abstract: This paper introduces a bivariate version of the generalized accelerated failure time model. It allows for simultaneity in the econometric sense that the two realized outcomes depend structurally on each other. Another feature of the proposed model is that it will generate equal durations with positive probability. The motivating example is retirement decisions by married couples. In that example it seems reasonable to allow for the possibility that each partner's optimal retirement time depends on the retirement time of the spouse. Moreover, the data suggest that the wife and the husband retire at the same time for a nonnegligible fraction of couples. Our approach takes as a starting point a stylized economic model that leads to a univariate generalized accelerated failure time model. The covariates of that generalized accelerated failure time model act as utility-flow shifters in the economic model. We introduce simultaneity by allowing the utility flow in retirement to depend on the retirement status of the spouse. The econometric model is then completed by assuming that the observed outcome is the Nash bargaining solution in that simple economic model. The advantage of this approach is that it includes independent realizations from the generalized accelerated failure time model as a special case, and deviations from this special case can be given an economic interpretation. We illustrate the model by studying the joint retirement decisions in married couples using the Health and Retirement Study. We provide a discussion of relevant identifying variation and estimate our model using indirect inference. The main empirical nding is that the simultaneity seems economically important. In our preferred speci cation the indirect utility associated with being retired increases by approximately 5% when one's spouse retires. The estimated model also predicts that the marginal eff ect of a change in the husbands' pension plan on wives' retirement dates is about 3.3% of the direct eff ect on the husbands'.
    JEL: J26 C41 C3
    Date: 2016–02–17
  9. By: Frey L.
    Abstract: La compréhension des mécanismes de rachat des contrats en assurance vie est cruciale, en particulier dans un environnement de taux bas avec un risque de remontée brutale des taux d’intérêt. Il est important pour la définition des politiques prudentielles d’avoir une vision d’ensemble de ce risque, qui puisse ainsi tenir compte d’effets systémiques, qui sont indépendants des systèmes d’information des assureurs et des spécificités de leurs sous-populations, tout en intégrant les différences entre assureurs. Une littérature empirique s’est développée sur les comportements de rachat en assurance-vie depuis les années quatre-vingt-dix, mobilisant diverses sources de données, les plus prometteuses semblant être les données issues d’enquêtes en panel auprès des ménages. Sur le plan macroéconomique, deux hypothèses principales sont étudiées : l’hypothèse du rendement, selon laquelle un assuré rachète son contrat lorsqu’il peut obtenir un meilleur rendement ailleurs, et l’hypothèse de fonds d’urgence, ou hypothèse de réserve d’argent, selon laquelle un assuré rachète son contrat lorsqu’il est confronté à un choc négatif non anticipé. Cette dernière hypothèse semble trouver le plus de support dans la littérature récente. L’impact de variables individuelles, comme l’ancienneté du contrat, est également étudié. L’enquête patrimoine de l’INSEE présente l’avantage d’être représentative de l’ensemble des assurés français, et en particulier, grâce à des techniques d’échantillonnage adaptées, elle assure une bonne représentation des ménages les plus riches qui sont ceux qui concentrent la détention d’assurance-vie. En outre, elle comporte des informations détaillées sur les caractéristiques de l’assuré, y compris sur le montant de son patrimoine et ses revenus. Néanmoins, elle présente l’inconvénient de ne comporter que très peu de données de flux, et aucun flux concernant l’assurance-vie ; seuls les encours de contrats d’assurance-vie sont disponibles par contrat individuel. Pour relier ces données aux taux de rachat observés par l’ACPR, les différents contrats d’assurance-vie de l’enquête et leurs caractéristiques détaillées sont agrégés au niveau du groupe d’assureurs (l’enquête patrimoine distingue neuf catégories d’assureurs). Les taux de rachat de ces groupes sur la période 2008-2014 sont ainsi rapprochés de l’enquête patrimoine 2010, dont les variables sont assez stables dans le temps. Des pistes d’explication peuvent alors être proposées même si, en raison de la nature des données, il n’est pas possible d’utiliser des techniques économétriques pour les étayer. L’enquête Patrimoine semble montrer qu’il existe deux sous-populations d’assurés se caractérisant principalement par la taille de leur patrimoine net. Les assurés des groupes d’assurance où les taux de rachat ont été les plus élevés sont ceux qui possèdent les plus gros patrimoines nets et également les plus gros contrats. Ce sont principalement des chefs d’entreprises, des cadres du secteur privé, en activité ou non (y compris dans les domaines artisans et commerçants), ou des professions libérales. Leur part d’Unités de Compte (UC) est plus importante, leur patrimoine financier comprend plus souvent des valeurs mobilières, la part de versements fixes est plus faible. Les rachats de ces assurés, plus diplômés et plus éduqués financièrement, répondraient principalement à une logique de rendement, au sens large, y compris avantage fiscal. Ces assurés ne donnent pas proportionnellement plus de mandats de gestion à leur banquier que les assurés avec des taux de rachat plus faibles mais gèrent plus activement eux-mêmes leurs portefeuilles de valeurs mobilières. Ces deux sous-populations distinctes ne peuvent pas intégralement être rapprochées des hypothèses de fonds d’urgence et de rendement étudiées dans la littérature. En effet, dans le cas français, du fait d’une plus faible sensibilité au chômage des ménages détenant de l’assurance-vie, l’hypothèse de fonds d’urgence est difficile à mettre en évidence. Ce qui peut être mis en évidence grâce à l’enquête patrimoine, c’est la détention d’assurance-vie comme réserve d’argent au sens large, y compris retraite. L’hypothèse de rendement net doit, pour sa part, tenir compte de l’avantage fiscal dont bénéficie l’assurance-vie, qui est important en termes de rendement net. Ainsi, les assureurs qui ont les taux de rachat les plus faibles ont aussi la plus forte proportion de contrats détenus pour des motifs de réserve d’argent. Les assureurs aux taux de rachat les plus élevés ont la plus forte proportion de contrats détenus pour des motifs de rendement net. Les éclairages tirés de cette enquête confirment la nécessité pour le superviseur de tenir compte, notamment dans les exercices de stress tests, de comportements différenciés en matière de rachats en fonction de la structure de détention par catégories socio-professionnelles et du patrimoine moyen de celles-ci.
    Keywords: assurance-vie, rachats, patrimoine.
    JEL: G22
    Date: 2016
  10. By: Italo Gutierrez
    Abstract: In this study I estimate that about 23% to 47% of older American on-the-job seekers search for another job because they feel insecure at their current employment. I also analyze whether unemployment insurance (UI) affects this relationship between job insecurity and on-the-job search. I find evidence that UI discourages on-the-job search, which in turn reduces the probability of starting a new job at a different employer. The average estimated effects are moderate but they mask important heterogeneities. On one hand, UI does not affect the search behavior of workers who do not believe to be at risk of job loss. These workers make up the majority of the employed population over 50. On the other hand, however, the effects can be substantial for workers with high levels of job insecurity.
    Keywords: on-the-job search, unemployment benefits; job loss expectations, control function methods
    JEL: J64 J65 D84
    Date: 2015–08

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