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on Economics of Ageing |
| By: | Manoli, Dayanand (University of Texas at Austin); Weber, Andrea (Vienna University of Economics and Business) |
| Abstract: | We present quasi-experimental evidence on the effects of increasing the Early Retirement Age (ERA) on older workers' retirement decisions. The analysis is based on social security reforms in Austria in 2000 and 2004, and administrative data allows us to distinguish between pension claims and job exits. Using a Regression Kink Design, we estimate that, within a birth cohort, a 1.0 year increase in the ERA leads to a 0.4 year increase in the average job exiting age and a 0.5 year increase in the average pension claiming age. When the ERA increases, many older workers remain in their jobs longer. |
| Keywords: | retirement, early retirement age, pension reform, life cycle labor supply, regression kink design |
| JEL: | H55 J21 J22 J26 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10154&r=age |
| By: | Christian Dudel (Max Planck Institute for Demographic Research, Rostock, Germany); Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | A key concern about population aging is the decline in the size of the economically active population. Working longer is a potential remedy. However, little is known about the length of working lives. We use the US Health and Retirement Study for 1992-2011 and multistate life tables to analyze working life expectancy at age 50 by gender, race/ethnicity, and education. Despite declines of 1-2 years following the Great Recession, in 2008-2011 American men aged 50 still spent 13 years, or two-fifths of their remaining life, working; while American women of the same age spent 11 years, or one-third of their remaining life, in employment. At age 50, the working life expectancy of college-educated individuals is twice as long as that of individuals with no high school education, and the working life expectancy of whites is one-third longer than that of blacks or Hispanics. These differentials are driven by labor force attachment, not mortality. Although educational differences have been stable over the past 20 years, racial differences started changing after the onset of the Great Recession. Our results show that while Americans generally work longer than people in other countries, there is considerable sub-population heterogeneity. We also find that the time trends are fluctuating, which may prove troublesome as the population ages. Policies targeting the weakest performing groups may be needed to increase the total population trends. |
| JEL: | J1 Z0 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2016-006&r=age |
| By: | Christine Ma; Chung Tran |
| Abstract: | In this paper we quantitatively explore implications of ageing demographic structure for government revenue raising capacity through lens of fiscal space. We base our analysis on dynamic general equilibrium, overlapping generations model calibrated to data from Japan and USA.We first map out fundamental-based fiscal limit using the Laffer curve approach, and then compute fiscal space in terms of budgetary room between the current revenue and the maximum revenue defined by the peak of Laffer curves. We demonstrate that the evolution of underlying demographic structures plays an important role in shaping a country’s fiscal limit and fiscal space. There will be significant contractions in fiscal space in Japan and USA when the two countries enter their late stage of demographic transition in 2040. In particular, the results from the model calibrated to Japan indicates that an increase in old-age dependency ratio to over 70 percent can reduce Japan’s fiscal space by 36 percent. When factoring in the increased fiscal cost of existing commitments to the age pension program, the net fiscal space for Japan turns negative. |
| Keywords: | Population Ageing, Laffer Curve, Fiscal Limit, Sustainability, Heterogeneity, Dynamic General Equilibrium. |
| JEL: | E62 H20 H60 J11 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2016-642&r=age |
| By: | Miyazaki, Takeshi; Kitamura, Yukinobu; Ohno, Taro |
| Abstract: | In the 1980s, income tax rates decreased and income tax deduction thresholds changed through income tax reforms in the OECD countries. Likewise, in Japan in the 1980s and 1990s, income tax rates decreased and the income tax deduction threshold increased. Recently, it has been pointed out that inequality and redistribution vary over different age groups. This study attempts to explore how different the redistributive effects of the income tax reforms in Japan are among various age groups, using Japanese household microdata for the period 1984–2009. The following results are obtained. First, the overall redistributive effect was greatest for the elderly group, followed by the middle-age group, and then the young group for the period 1984–2009. Furthermore, this trend increased steadily over time. Second, the difference in the total redistributive effect between the young and elderly increased owing to a large reduction in the base effect for the young. Third, the redistributive effect of income tax for the older elderly group is smaller than that for the younger elderly group. The consequences from Japan’s experience could provide insightful suggestions for redistribution policies in other countries, most of which will face an aging society in the future. |
| Keywords: | Base effect, personal income tax, population aging, rate effect, redistribution |
| JEL: | D31 H2 H24 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:645&r=age |
| By: | Kucsera, Dénes; Christl, Michael |
| Abstract: | This paper studies actuarial neutrality in the Austrian pension system. It is often argued that actuarial neutrality constitutes an incentive for people to retire. We show that there are almost no financial incentives within the Austrian pension corridor, when we use the traditional definition of actuarial neutrality. Taking taxation into account, our results suggest that financial incentives for early retirement stem mainly from the Austrian tax system and not from the pension system itself. |
| Keywords: | actuarial neutrality,early retirement,pension system,retirement |
| JEL: | J26 H55 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:145293&r=age |
| By: | Bjorn Lindgren |
| Abstract: | The objective is to review the evidence on (a) ageing and health and (b) the demand for health- and social services among the elderly. Issues are: does health status of the elderly improve over time, and how do the trends in health status of the elderly affect the demand for health- and elderly care? It is not a complete review, but it covers most of recent empirical studies. The reviewed literature provides strong evidence that the prevalence of chronic disease among the elderly has increased over time. There is also fairly strong evidence that the consequences of disease have become less problematic due to medical progress: decreased mortality risk, milder and slower development over time, making the time with disease (and health-care treatment) longer but less troublesome than before. Evidence also suggests the postponement of functional limitations and disability. Some of the reduction in disability can be attributed to improvements in treatments of chronic diseases, but it is also due to the increased use of assistive technology, accessibility of buildings, etc. The results indicate that the ageing individual is expected to need health care for a longer period of time than previous generations but elderly care for a shorter. |
| JEL: | H51 I1 I38 J11 J14 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22521&r=age |
| By: | Schäfer, Konrad C. |
| Abstract: | This paper analyzes private retirement savings, the amount for German individuals and how these savings are influenced by personality traits. With the 2002 to 2009 cross section of the Socio-Economic Panel for Germany (SOEP), it is investigated how the Big-Five and the Locus of Control influence the decision to have private retirement savings, and the estimated amount of these savings. Results indicate a positive effect for Extraversion and a negative effect for Agreeableness on the probability to have such savings. Extraversion also positively effects the size of retirement related savings as does having an more internal Locus of Control. Similar to the probability to have retirement savings Agreeableness also reduces the expected amount of such savings. Personality traits only seem to influence the retirement savings if the individual has scores further away from the average of the specific trait. Additionally regressions are implemented that include the personality measures as dummies to allow for non-linear effects. Furthermore, other types of wealth accumulation such as house related savings are investigated to study how the effects might differ for different types of wealth accumulation. |
| Keywords: | Non-cognitive skills; Big-Five; Locus of Control, retirement |
| JEL: | C34 C35 J26 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-580&r=age |
| By: | James Banks; Richard Blundell; Peter Levell; James P. Smith |
| 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, number of household members, and out-of -pocket medical expenditures. Among all the potential explanations considered, we find that those to do with healthcare—differences in levels and age paths in medical expenses—can fully account for the steeper declines in nondurable consumption in the UK compared to the US. |
| JEL: | D10 D11 D12 D14 D91 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22513&r=age |
| By: | Niimi, Yoko |
| Abstract: | This paper examines the behavioral response of households to wealth transfer taxation using household survey data from Japan. The data reveal that relatively few households plan to reallocate the newly taxable amount of wealth to their own consumption or inter vivos transfers in response to the recent lowering of the basic deduction of the inheritance tax, largely because of a lack of concern about taxes. This may partly reflect the fact that bequest motives are relatively weak and/or that the majority of saving is for either retirement or precautionary purposes in Japan. However, our estimation results also suggest that parents with an altruistic motive for bequests are more likely to avoid an increase in their children’s tax bill by reallocating the newly taxable amount of wealth to inter vivos transfers. Parents with an exchange motive for bequests are also found to be responsive to changes in tax policy, but their reaction is heterogeneous: some of them reallocate the newly taxable amount of wealth to their own consumption while others reallocate it to inter vivos transfers. |
| Keywords: | bequests, inheritance tax, inter vivos transfers, Japan, precautionary saving, bequests, inheritance tax, inter vivos transfers, Japan, precautionary saving, D31, D64, H26, H31 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000110&r=age |
| By: | Horioka, Charles Yuji; Gahramanov, Emin; Hayat, Aziz; Tang, Xueli |
| Abstract: | In this paper, we conduct a theoretical analysis of why individuals provide care and attention to their elderly parents using a two-period overlapping generations model with endogenous saving and a “contest success function†and test this model using micro data from a Japanese household survey, the Osaka University Preference Parameter Study. To summarize our main findings, we find that the Japanese are more likely to live with (or near) their elderly parents and/or to provide care and attention to them if they expect to receive a bequest from them, which constitutes strong support for the selfish bequest motive or the exchange motive (much stronger than in the United States), but we find that their caregiving behavior is also heavily influenced by the strength of their altruism toward their parents and social norms. |
| Keywords: | Altruism, attention, bequest motive, care, caregiving, contest success function, coresidence, elderly care, exchange motive, family care, informal care, intergenerational transfers, Japan, parental care, parent-child relations, selfishness, social norms, strategic bequest motive, Altruism, attention, bequest motive, care, caregiving, contest success function, coresidence, elderly care, exchange motive, family care, informal care, intergenerational transfers, Japan, parental care, parent-child relations, selfishness, social norms, strategic bequest motive, D12, D64, D91, E21, J14 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000108&r=age |
| By: | Stefan Domonkos (Institute of Economic Research, Slovak Academy of Sciences); Andras Simonovits (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences also Mathematical Institute of Budapest University of Technology, Budapest) |
| Keywords: | post-socialist countries, pension reform, political sustainability, economic sustainability, pension adequacy, pension privatisation |
| JEL: | H11 H55 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1615&r=age |
| By: | Hugonnier, J.; Pelgrin, F.; St-Amour, P. |
| Abstract: | The observed health decline near the end of life coincides with less curative (e.g. hospital stay, doctor visits), and more comfort (e.g. nursing home) care, which accelerate both the fall in wealth, and the timing of death. We investigate whether these dynamics jointly result from a closing down the shop decision i.e. a depletion of the health stock is optimally selected (and eventually accelerated), leading to states characterized by indifference between life, and death. Towards that aim, we expand, structurally estimate, and simulate a life cycle model of financial,and health expenses with endogenous mortality exposure (Hugonnier et al., 2013). Under economically plausible, and statistically verified conditions, we find that, unless sufficiently rich and healthy, agents will optimally select expected depletion of their health capital, and associated increase in death likelihood. Moreover, we identify a wealth and health locus below which agents accelerate their health depletion. Importantly, wealth is also expected to decline for all, such that all surviving agents eventually enter the closing down phase. |
| Keywords: | End of life; Life cycle; Dis-savings; Endogenous mortality risk; Unmet medical needs; Right to refuse treatment; |
| JEL: | D91 D14 I12 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:16/28&r=age |
| By: | Bruno De Conti |
| Abstract: | Ao final de 2014, o conjunto das entidades fechadas de previdência complementar (EFPCs) no Brasil apresentava uma carteira de R$ 672 bilhões. Cerca de 45% destes recursos são detidos pelas três maiores entidades do país, a saber, Caixa de Previdência dos Funcionários do Banco do Brasil (Previ), Fundação Petrobras de Seguridade Social (Petros) e Fundação dos Economiários Federais (Funcef). Este texto tem como objetivo principal analisar pormenorizadamente a evolução das carteiras de investimento destas três entidades ao longo do período 2003-2013. Conclui-se que, apesar de deterem uma maior participação de investimentos em renda variável e investimentos estruturados – se comparadas ao conjunto das EFPCs –, estas três entidades têm uma gestão também bastante conservadora de suas carteiras, com grande concentração de recursos alocados em títulos públicos. O texto apresenta uma análise do perfil e da gestão destes títulos públicos detidos pelas três entidades, além de uma divisão setorial dos investimentos (em ações e fundos de investimento) por elas realizados. A análise deixa clara a importância destas três entidades: i) nos processos de privatização de empresas públicas; ii) na configuração de grandes grupos nacionais; e iii) nos investimentos em infraestrutura. At the end of 2014, the pension funds in Brazil held a portfolio of R$ 672 billion. About 45% of these resources are owned by the three largest entities of the country, namely, Previ, Petros and FUNCEF. This article aims to analyze in detail the evolution of the portfolios of these three entities over the period 2003-2013. We conclude that although they hold a higher proportion of investments in equities and structured investments - compared to the other pension funds - the portfolio management of these three entities is also very conservative, counting on a great concentration of resources allocated in government bonds. The article presents an analysis of the profile and management of these government bonds, and a sectoral division of the investments made by these entities. The analysis makes clear the importance of these three entities in: i) public companies privatization; ii) major national groups configuration; iii) infrastructure investments. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:ipe:ipetds:2216&r=age |
| By: | Julio E. Romero-Prieto. |
| Abstract: | En este documento se analiza el cambio demográfico de la región del Pacífico usando ocho censos, seis encuestas demográficas y registros vitales. Hasta cierto punto, los procesos de población han sido similares en las regiones Caribe y el Pacífico. Sin embargo, se encontraron diferencias notables en comparación con Bogotá y el resto del país. A pesar de una reducción sistemática en la razón de dependencia, la dependencia económica efectiva es superior a otras regiones de Colombia, siendo uno de los límites al desarrollo económico de las regiones periféricas. Una estimación retrospectiva de la mortalidad en la primera infancia en el Pacífico muestra una disminución sustancial en las últimas décadas, pero la diferencia con el resto del país representa la penalidad de nacer y vivir en las regiones menos desarrolladas de Colombia. Estimaciones indirectas de la mortalidad adulta y la esperanza de vida en edades productivas conducen a la misma conclusión. Classification JEL: J11, J19, R11. |
| Keywords: | Pacífico colombiano, cambio demográfico, estimación demográfica, mortalidad, esperanza de vida, censos de Colombia, ENDS. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:region:232&r=age |
| By: | Heenkenda, Shirantha |
| Abstract: | This research sought to identify the motivational factors associated with the intention to readiness to retirement planning of estate sector employees in Sri Lanka. The theory of planned behavior (TPB) investigates the effects of the behavioral factors associated with the intention to readiness to retirement planning. Simple random sampling method was used to select the respondents and face-to-face interview was conducted to survey 900 households in the Nuwara Eliya district of the central province in Sri Lanka. The principal component analysis was used to calculate factors with Varimax rotation applied factor extraction. The regression analysis method was used to facilitate a path analysis of respondents’ behavior. The result revealed that estate sector employees’ readiness to retirement planning was significantly related to personal attitudes, social pressures and a sense of control. Readiness to retirement planning turns out to be of utmost important and the study discovered behavior patterns that have implications. Reducing structural barriers, financial knowledge and financial inclusion may culminate the retirement planning behavior. Findings of this study can be beneficial for financial product development, especially for rural and informal sector employees in attracting and retaining clients. |
| Keywords: | Behavioral finance, Estate Sector Employees, Retirement Planning, Theory of planned behavior |
| JEL: | D14 G0 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72744&r=age |