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on Economics of Ageing |
| By: | Nicolas Coeurdacier (SciencesPo) |
| 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: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:442&r=age |
| By: | Calabria, Alejandro A.; Cunquero, Camila |
| Abstract: | In recent years, various phenomena such as aging population, international economic crisis and changes in the conception of the role of the state have forced countries to reconsider the role of social security in general and foresight social in particular. The Argentine case is not the exception. In the last eight years our pension system has experienced a lot of reforms. This working paper will try, as main objective, to provide an overview of the current situation of Argentine´s pension system and analyze its performance in the medium term, from a perspective of international comparison, analyzing how was, in other countries the resolution of the problems that we will have inexorably to face in the next years, such as loss of the demographic dividend and the increasing deterioration of ANSES´s fiscal accounts. |
| Keywords: | sistema previsional; tasa de cobertura; financiamiento; Argentina; comparación internacional |
| JEL: | H0 H55 I38 |
| Date: | 2016–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72940&r=age |
| By: | Weinert, Jan-Hendrik; Gründl, Helmut |
| Abstract: | The changing social, financial and regulatory frameworks, such as an increasingly aging society, the current low interest rate environment, as well as the implementation of Solvency II, lead to the search for new product forms for private pension provision. In order to address the various issues, these product forms should reduce or avoid investment guarantees and risks stemming from longevity, still provide reliable insurance benefits and simultaneously take account of the increasing financial resources required for very high ages. In this context, we examine whether a historical concept of insurance, the tontine, entails enough innovative potential to extend and improve the prevailing privately funded pension solutions in a modern way. The tontine basically generates an age-increasing cash flow, which can help to match the increasing financing needs at old ages. However, the tontine generates volatile cash flows, so that - especially in the context of an aging society - the insurance character of the tontine cannot be guaranteed in every situation. We show that partial tontinization of retirement wealth can serve as a reliable supplement to existing pension products. |
| Keywords: | Life Insurance,Tontines,Annuities,Asset Allocation,Retirement Welfare,Aging Society |
| JEL: | D14 D91 G11 G22 H75 J11 J14 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:icirwp:2216&r=age |
| By: | Elena Jarocinska; Anna Ruzik-Sierdzinska |
| Abstract: | This paper analyses the distributional effects of the Polish old-age pension reform introduced in 1999. Following a benchmark Mincer earnings equation, and using a newly developed microsimulation model we project future pension benefits for males born in years 1969–1979. We find that inequality of predicted first pension benefits measured by the Gini coefficient increases from 0.119 to 0.165 for cohorts of men retiring between 2036 and 2046. The observed increased inequality of pension benefits is due to the decreasing share of initial capital that is based on a more generous DB formula in the total accumulated pension capital. At the same time, inequality in replacements rates decreases due to a stronger link between contributions paid through the entire working life and pension benefits. |
| Keywords: | pension benefits, inequality, replacement rates, microsimulation |
| JEL: | H55 J26 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnstan:0482&r=age |
| By: | Alexandra Rudolph (German Development Institute (DIE)) |
| Abstract: | Old-age poverty is to become one of the most pressing issues in the coming decades given the demographic trends forecasted. Particularly in developing countries this could be an obstacle to inclusive and sustainable growth as well as the fight against all forms of poverty (SDG 1), through shocks on consumption and production patterns within countries. Investigating social, non-contributory pension systems highlights their potential for countries to implement one of the main instrument to fight old-age poverty. A new comprehensive global data set of 185 countries over the 1960-2012 period on the provision of social pension across the world allows the author to examine trends in social pension provision in the last five decades and study internal and external political economy drivers of implementation. Grouped event history data allows the control of duration dependence on the probability of social pension adoption in the multivariate setting. Results show that internal (national) demand drivers are more important than external (international) peer pressure while the composition of the political system and of governments seem to be major factors influencing the provision of social pension mainly in developing countries. Since only 50 percent of countries provide against old-age poverty countries may use the window-of-opportunity of the 2030 Agenda to reach “nationally appropriate social protection systems” (SDG 1.3; UN, 2015). |
| Keywords: | public pension; social pension; demographic change; old-age poverty; political economy; panel data |
| JEL: | H55 J14 I38 |
| Date: | 2016–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:got:gotcrc:212&r=age |
| By: | Matthew S. Rutledge; Steven A. Sass; Jorge D. Ramos-Mercado |
| Abstract: | The ability of older job-changers to find “suitable” employment affects both their current income and their ability to work long enough to secure an adequate retirement income. One measure of suitable employment is the range of occupations available to them. This brief, based on a recent study, assesses the extent to which occupational options narrow for workers as they age from their early-fifties to their mid-sixties and whether the pattern varies by gender or socioeconomic status, as measured by education level. The discussion proceeds as follows. The first section reviews the previous literature. The second section discusses the data and methodology. The third section presents findings on the narrowing of job options and the associated change in wages. The fourth section reviews changes in older workers’ access to occupations since the mid-1990s, including differences by gender and education. The final section concludes that job options decline with age, but the outlook is generally not as bad as it used to be, particularly for better-educated women. Further, once the analysis accounts for differences in job characteristics, “old-person” jobs pay no less than other jobs. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2016-13&r=age |
| By: | Marchand, Joseph (University of Alberta, Department of Economics); Smeeding, Timothy (University of Wisconsin-Madison, Robert M. La Follette School of Public Affairs) |
| Abstract: | This chapter explores the relationship between poverty and aging, in terms of its measurement and trends, as well as its alleviation, with particular attention on the most vulnerable individuals at each end of the age distribution. The measurement addresses both the definition of poverty and its aggregation over various age groups. The trends highlight a significant reduction in poverty among the elderly and a gradual increase in poverty among children and working age individuals, both in the United States and across the greater developed world, over the past fifty years. The alleviation of poverty is attributed to the labor market and to social expenditure and its associated policies, which have been especially effective for the elderly. A summary of key contributions and a discussion follow that set forth an agenda for further research and policy. |
| Keywords: | aging; children; distribution; elderly; income support; labor market; poverty; public policy; social expenditure |
| JEL: | D30 D60 H50 I30 J10 J20 J30 |
| Date: | 2016–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2016_011&r=age |
| By: | Roquebert, Q.; Tenand, M. |
| Abstract: | Although the consumption of home care is increasing with population ageing, little is known about its price sensitivity. This paper estimates the price elasticity of the demand for home care of the disabled elderly, using the French home care subsidy program ("APA"). We use an original dataset collected from a French District Council with administrative records of APA out-of-pocket payments and home care consumption. Identification primarily relies on inter-individual variations in producer prices. We use the unequal spatial distribution of producers to address the potential price endogeneity arising from non-random selection into a producer. Our results point to a price elasticity around -0.4: a 10% increase in the out-of-pocket price is predicted to lower consumption by 4%, or 37 minutes per month for the median consumer. Copayment rates thus matter for allocative and dynamic efficiencies, while the generosity of home care subsidies also entails redistributive effects. |
| Keywords: | long-term care; price elasticity; public policy; |
| JEL: | C24 D12 I18 J14 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:16/16&r=age |
| By: | Peters, Jan Cornelius |
| Abstract: | In Germany, as in many other European countries, there will be a shift in the workforce age structure in the next decades. The number of older workers will increase, and the number of younger and middle aged workers will decline. This paper provides evidence how the shift in the relative labor supply affects labor productivity, taking into account that differently aged workers are suggested to be imperfect substitutes. Using a cross sectional linked employer-employee data set from 2012, translog cost functions are estimated. To control for the skill level of the workers a nested production structure is applied. This allows to analyze age complementarities within groups of workers that have a comparable skill level. Based on the estimated parameters, pairwise elasticities of complementarity and factor price elasticities are computed. The results indicate that workers that belong to different age groups are complementary factors. But the degree of complementarity differs, depending on the age and the skill level of the workers. The complementarities especially arise between younger and middle aged workers. The highest degree of complementarity is observed between younger and middle aged high skilled labor. Simulating how the expected shift in the age structure affects labor productivity indicates that the productivity of younger and middle aged workers will increase. In contrast, the productivity of older workers will significantly decline caused by their increasing share in the workforce. |
| Keywords: | age complementarities,demographic change,labor-labor substitution,linked employer-employee,translog |
| JEL: | C31 D24 J11 J31 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cauewp:201610&r=age |
| By: | McGrattan, Ellen R. (Federal Reserve Bank of Minneapolis); Prescott, Edward C. (Federal Reserve Bank of Minneapolis) |
| Abstract: | Many countries are facing challenging fiscal financing issues as their populations age and the number of workers per retiree falls. Policymakers need transparent and robust analyses of alternative policies to deal with demographic changes. In this paper, we propose a simple framework that can easily be matched to aggregate data from the national accounts. We demonstrate the usefulness of our framework by comparing quantitative results for our aggregate model with those of a related model that includes within-age-cohort heterogeneity through productivity differences. When we assess proposals to switch from the current tax and transfer system in the United States to a mandatory saving-for-retirement system with no payroll taxation, we find that the aggregate predictions for the two models are close. |
| Keywords: | Taxation; Retirement; Social Security; Medicare |
| JEL: | E13 H55 I13 |
| Date: | 2016–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:534&r=age |
| By: | Deuchert, E.; Eugster, B. |
| Abstract: | Disability insurance systems are widely criticized for their inherent work disincentives. This paper evaluates the effects of a reform of the Swiss DI system that aims to lower pensions for a group of existing DI beneficiaries and introduces an additional cash cliff to the pension schedule. The effects on earnings and employment are zero but the disability degree increases on average by 3 percentage points and 75% of individuals manage to keep their old pension level. We partially identify income and substitution effects employing the principal stratification framework. The income effect ranges from 9 to 20 percentage pints in terms of employment, and 136 to 3,135 CHF (ca. 50% of previous earnings) in terms of earnings. The substitution effect is smaller and suggests that individuals reduce employment by a maximum of 3.7 percentage points and earnings by a maximum of 1,001 CHF (if any). |
| Keywords: | disability insurance; work disincentives; income and substitution effects; partial benefit system; |
| JEL: | C30 I13 J01 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:16/21&r=age |
| By: | Schünemann, Johannes; Strulik, Holger; Trimborn, Timo |
| Abstract: | In developed countries, women are expected to live about 4-5 years longer than men. In this paper we develop a novel approach in order to gauge to what extent gender differences in longevity can be attributed to gender-specific preferences and health behavior. For that purpose we set up a physiologically founded model of health deficit accumulation and calibrate it using recent insights from gerontology. From fitting life cycle health expenditure and life expectancy we obtain estimates of the gender-specific preference parameters. We then perform the counterfactual experiment of endowing women with the preferences of men. In our benchmark scenario this reduces the gender gap in life expectancy from 4.6 to 1.4 years. When we add gender-specific preferences for unhealthy consumption, the model can motivate up to 88 percent of the gender gap. Our theory offers also an economic explanation for why the gender gap declines with rising income. |
| Keywords: | health,aging,longevity,gender-specific preferences,unhealthy behavior |
| JEL: | D91 J17 J26 I12 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuweco:052016&r=age |