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on Economics of Ageing |
| By: | Tzu-Ting Yang (Institute of Economics, Academia Sinica, Taipei, Taiwan) |
| Abstract: | Population aging causes financial imbalance in pay-as-you-go public pension programs. To remedy this problem while ensuring the adequacy of retirement savings for employees, many countries complement or substitute for public pensions by regulating workplace pensions. This paper exploits a pension reform in Taiwan that has mandated, since 2005, that all private-sector employers contribute at least 6% of wages to employees’ individual pension accounts monthly. I use the workers in the unaffected sector as a comparison group and employ a difference-in-differences method to estimate the impact of the reform on the household saving rate. My estimates suggest that making private pensions mandatory significantly reduces the household saving rate by between 2.06 and 2.45 percentage points and imply that the degree of substitutability between workplace pensions and saving is about −0.50 to −0.60. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:16-a013&r=age |
| By: | Jean-Olivier Hairault (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); François Langot (PSE - Paris School of Economics); Sébastien Ménard (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Université du Maine); Thepthida Sopraseuth (CEPREMAP - Centre pour la recherche économique et ses applications, THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | At the end of working life, as well as reducing unemployment benefits, the unemployment-insurance agency could apply pension tax instead of wage tax. First, the pension tax provides greater incentives as the value of re-employment is tax-free. Second, the short job duration before retirement implies that the budgetary return and search incentives associated with the pension tax are considerable. By way of contrast, younger workers have greater search intensity and their future pension taxes are more remote and therefore more heavily-discounted: for them the wage tax is more efficient than is the pension tax. Finally, even in the special case where search intensity is zero close to retirement, perfect risk-sharing across unemployment and retirement is welfare-improving thanks to the pension tax. |
| Keywords: | Unemployment insurance, Retirement, Recursive contracts, Moral Hazard |
| Date: | 2016–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01292095&r=age |
| By: | Vanya Horneff; Raimond Maurer; Olivia S. Mitchell |
| Abstract: | Most defined contribution pension plans pay benefits as lump sums, yet the US Treasury has recently encouraged firms to protect retirees from outliving their assets by converting a portion of their plan balances into longevity income annuities (LIA). These are deferred annuities which initiate payouts not later than age 85 and continue for life, and they provide an effective way to hedge systematic (individual) longevity risk for a relatively low price. Using a life cycle portfolio framework, we measure the welfare improvements from including LIAs in the menu of plan payout choices, accounting for mortality heterogeneity by education and sex. We find that introducing a longevity income annuity to the plan menu is attractive for most DC plan participants who optimally commit 8-15% of their plan balances at age 65 to a LIA that starts paying out at age 85. Optimal annuitization boosts welfare by 5-20% of average retirement plan accruals at age 66 (assuming average mortality rates), compared to not having access to the LIA. We also compare the optimal LIA allocation versus two default options that plan sponsors could implement. We conclude that an approach where a fixed fraction over a dollar threshold is invested in LIAs will be preferred by most to the status quo, while enhancing welfare for the majority of workers. |
| JEL: | D14 D91 G11 G22 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22717&r=age |
| By: | Claudia Olivetti; Dana E. Rotz |
| Abstract: | We study associations among women’s current marital status, past marital history, and later-life labor force participation. We first document these relationships using data from the 1986 to 2008 waves of the Survey of Income and Program Participation (SIPP). We then exploit variation in laws governing divorce across states and over time to quasi-experimentally identify how the timing of an exogenous increase in divorce risk (that is, the introduction of unilateral divorce) impacts employment and retirement outcomes for older women. The spread of unilateral divorce, we find, was associated with cross-cohort differences in the probability of divorce over the lifecycle. For women with a low risk of divorce, later exposure to unilateral divorce significantly increases the probability of full-time employment later in life, and significantly decreases retirement wealth. This finding suggests that ever-divorced women are working longer remedially; when a woman unexpectedly divorces later in life, she is less likely to have engaged in precautionary human capital investment and might have to work longer to increase her assets prior to retirement. For women with a high risk of divorce, later exposure to increases in divorce risk does not impact full-time employment after age 50 but is positively associated with investment in education post marriage. These women invest more in their own human capital within marriage, which might insure them against increases in exogenous divorce risk at later ages. |
| JEL: | J12 J21 J22 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22738&r=age |
| By: | Anne Lavigne (LEO - Laboratoire d'économie d'Orleans - UO - Université d'Orléans - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This article aims at pointing the extreme heterogeneity of the survivor’s pension benefit system in France and at proposing solutions to overcome this complexity. We advocate a unified system based on splitting the pension rights among the couples (being they married or just registered) as it exists for example in Germany. This reform would be more efficient if it were articulated to a more comprehensive reform encompassing the transition from an annuity-based pension system to notional defined contribution accounts. |
| Abstract: | Après avoir examiné les raisons d'être de dispositifs de réversion (versement d'une fraction de la pension d'un conjoint décédé à son conjoint survivant), nous mettons en évidence les très grandes disparités, de philosophie et de modalités de calcul, des mécanismes de réversion dans les différents régimes de retraite français. Nous plaidons pour une réforme systémique, passant d'une technique de réversion à un partage de droits entre les conjoints, non nécessairement mariés, qui s'articulerait à un passage de calcul des droits à pension directs sous la forme de comptes notionnels. |
| Keywords: | pension splitting,pension,survivors benefits,retraite,réversion,partage des droits,comptes notionnels |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01316615&r=age |
| By: | Anna Batyra (Bogazici University, Istanbul); David de la Croix (IRES - CORE, Université catholique de Louvain); Olivier Pierrard (Banque centrale du Luxembourg); Henri Sneessens (CREA, Université du Luxembourg - IRES, Université catholique de Louvain) |
| Abstract: | The rise of early retirement in Europe is typically attributed to the European system of taxes and transfers. Contrary to a purely neoclassical framework, a model with imperfectly competitive labor market also allows to consider the effect of the bargaining power of labor and matching efficiency on preretirement. We find that lower bargaining power of workers and less efficient labor markets characterized by the declining matching efficiency have been an important determinant of early retirement in France and Germany. These structural changes, combined with early-retirement transfers and population ageing, are also consistent with the joint evolution of employment and unemployment rates, the labor share and the seniority premium. |
| Keywords: | Overlapping Generations, Search Unemployment, Labor Force Participation, Aging, Labor Market Policy and Institutions |
| JEL: | E24 H55 J26 J64 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:16-13&r=age |
| By: | Yukihiro Nishimura (Osaka University [Osaka]); Pierre Pestieau (CEPR - Center for Economic Policy Research - CEPR, CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Grégory Ponthière (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, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics) |
| Abstract: | We develop a 3-period overlapping generations (OLG) model where individuals borrow at the young age to finance their education. Education does not only increase future wages, but, also, raises the duration of life, which, in turn, affects education choices, in line with Ben Porath (1967). We first identify conditions that guarantee the existence of a stationary equilibrium with perfect foresight. Then, we reexamine the conditions under which the Ben-Porath effect prevails, and emphasize the impact of human capital decay and preferences. We compare the laissez-faire with the social optimum, and show that the latter can be decentralized provided the laissez-faire capital stock corresponds to the one satisfying the modified Golden Rule. Finally, we introduce intracohort heterogeneity in the learning ability, and we show that, under asymmetric information, the second-best optimal non-linear tax scheme involves a downward distortion in the level of education of less able types, which, quite paradoxically, would reinforce the longevity gap in comparison with the laissez-faire. |
| Keywords: | Education,Life expectancy,OLG models,Optimal policy |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01230932&r=age |
| By: | Scheil-Adlung, Xenia. |
| Abstract: | This paper: (i) examines long-term care (LTC) protection in 46 developing and developed countries covering 80 per cent of the world’s population; (ii) provides (data on LTC coverage for the population aged 65+; (iii) identifies access deficits for older persons due to the critical shortfall of formal LTC workers; (iv) presents the impacts of insufficient public funding, the reliance on unpaid informal LTC workers and high out-of-pocket payments (OOP); and (v) calls for recognizing LTC as a right, and mainstreaming LTC as a priority in national policy agendas given the benefits in terms of job creation and improved welfare of the population. |
| Keywords: | social protection, long term care, older people, elder care, care worker, working conditions, social policy, public expenditure, deficit, developed countries, developing countries, protection sociale, soins de longue durée, personnes âgées, soins aux personnes âgées, personnel soignant, conditions de travail, politique sociale, dépenses publiques, déficit, pays développés, pays en développement, protección social, cuidados de larga duración, personas de edad avanzada, asistencia a las personas de edad avanzada, cuidador, condiciones de trabajo, política social, gasto público, déficit, países desarrollados, países en desarrollo |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994886493402676&r=age |
| By: | Habila, Murna |
| Abstract: | ABSTRACT In this paper, we examined the role of financial literacy in retirement security for low-income minorities in Illinois. This paper also discusses extend of success among adults, couples, and elderly individuals, specifically, we develop a literature background on retirement savings and how it has been used to promote retirement security in Illinois. As one variable towards achieving retirement security, to increase the chances of a more successful outcome for minority persons faced with impending retirement issues? These are the questions this research attempts to answer. Towards understanding these issues properly, we investigate into financial literacy in Illinois. This study seeks to study how workers gain financial education required make financial decisions towards retirement also for retirement wellbeing we also review the predominant method of savings by evaluating whether people tried to achieve success through these methods, family, and place of work or financial advisors. To figure how much they need to save for retirement. Also, what are the factors that are detrimental to retirement planning in Illinois? Finally, we will find out what financial education are interrelated to others, that rely on formal methods such as retirement calculators, retirement seminars as oppose to others that rely on family / relatives or co-workers . Are those that have a higher financial literacy exposure are more likely to save more and out of debt, invest in bonds, stocks more as compared to others with lower financial education? |
| Keywords: | Keywords: Retirement security, Education, Low-income, Retirement wellbeing, Retirement security Keywords: Retirement security, Education, Low-income, Retirement wellbeing, Retirement security |
| JEL: | Z19 |
| Date: | 2015–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73988&r=age |
| By: | Racelis, Rachel H.; Salas, J.M. Ian S.; Herrin, Alejandro N.; Abrigo, Michael R.M. |
| Abstract: | A recent Philippine study examined economic gain from age structure transition at the national level by using economic support ratios and National Transfer Accounts estimates for the years 1991, 1999, and 2011. The study showed that the Philippines has steadily been experiencing demographic change (increasing percentage of the population in the working ages) and that there was economic gain from such change, as indicated by increasing support ratios during the indicated period. But in any given year, the support ratio that is observed at the national level is actually an average across diverse groups. This paper attempts to answer the following questions: In a given year, how do support ratios vary between groups? How do the variations in support ratios between groups compare across different years? Population groups are studied to determine whether those that have higher proportions in the working ages would show higher support ratios--a pattern that was found in the study cited when the Philippines was observed at the national level over time. The population is grouped in this study on two attributes, namely, household income (terciles) and location of residence (urban or rural) for a total of six groups. These six groups are used to observe variations in population age distributions, economic lifecycle patterns, and support ratios in the years 1991, 1999, and 2011, parallel to the years covered in the national level study cited and with each year representing periods with different economic conditions. |
| Keywords: | Philippines, National Transfer Accounts, first demographic dividend, economic support ratio, urban economic lifecycle, rural economic lifecycle, population age structure transition |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:rpseri:dp_2016-32&r=age |
| By: | Thomas Blanchet (ENSAE - Ecole Nationale de la Statistique et de l'Analyse Economique - Ecole Nationale de la Statistique et de l'Analyse Economique, PSE - Paris School of Economics); Yves Dubois (INSEE Paris - INSEE Paris); Anthony Marino (INSEE Paris - INSEE Paris); Muriel Roger (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)) |
| Abstract: | L’existence d’un système de retraite modifie les comportements d’épargne des ménages. Nous estimons le phénomène de substitution entre épargne privée et montant des droits à pension dans le cas français à partir des données de l’enquête Patrimoine et du modèle de microsimulation Destinie de l’INSEE. Les comportements d’épargne sont modélisés à l’aide du modèle de Gale (1998). Les résultats mettent en évidence des comportements de substitution entre l’épargne des ménages et leurs droits à pension. L’amplitude de ces effets est sensible aux paramètres d’actualisation des agents. Une hausse des pensions publiques induit une diminution de l’épargne complémentaire retraite et une diminution de l’investissement immobilier. Ce second effet est prédominant. |
| Keywords: | Patrimoine,Retraites,Cycle de vie |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01292412&r=age |
| By: | Eve Caroli; Claudio Lucifora (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Daria Vigani (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore) |
| Abstract: | We investigate the causal impact of retirement on health care utilization. Using SHARE data (from 2004 to 2013) for 10 European countries, we show that health care utilization increases when individuals retire. This is true both for the number of doctor’s visits and for the intensity of medical care use (defined as the probability of going more than 4 times a year to the doctor’s). This increase turns out to be driven by visits to general practitioners’, while specialists’ visits are not affected. We also find that the impact of retirement on health care utilization is significantly stronger for workers retiring from jobs characterized by long hours worked - more than 48 hours a week and/or being in the 5th quintile of the distribution of hours worked. This suggests that at least part of the increase in medical care use following retirement is due to the decrease in the opportunity cost of time faced by individuals when they retire. |
| Keywords: | Retirement, Health, Health Care Utilization. |
| JEL: | J26 I10 C26 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie1:def049&r=age |
| By: | Ryo Arawatari (Graduate School of Economics, Nagoya University); Tetsuo Ono (Graduate School of Economics, Osaka University) |
| Abstract: | We consider a cross-country difference of age gap in voter turnout and its im- pact on fiscal policymaking in a multi-country, overlapping-generations model. We present con ict over fiscal policy between successive generations (i.e., the young and elderly). We show that higher turnout of the elderly in voting may have a non- monotone effect on the size of government debt, depending on voters' inter-temporal elasticity of substitution of public expenditure. |
| Keywords: | fiscal policy; voter turnout; public debt; probabilistic voting; small open economies. |
| JEL: | D70 E62 H63 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1624&r=age |
| By: | Claus Thustrup Kreiner; Søren Leth-Petersen; Peer Ebbesen Skov (Department of Economics,Auckland University of Technology, NZ) |
| Abstract: | A Danish tax reform, decided in May 2009 and taking effect from the beginning of 2010, lowered the marginal tax rate on top bracket taxable income from 63% to 56%. Because contributions to pension accounts are tax deductible, the reform provided an incentive to increase pension contributions before the change in taxation. Using high frequency panel data, we document an increase in pension contributions in the second half of 2009 in response to the anticipated change in taxation, and that this led to an increase in total savings. Length: 36 pages |
| Keywords: | Pension savings, tax incentives, high frequency individual data. |
| JEL: | H3 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:aut:wpaper:201606&r=age |
| By: | Esa Eslami |
| Abstract: | This brief highlights the characteristics of and examines trends in elderly individuals participating in SNAP. |
| Keywords: | SNAP, elderly, food security, seniors, hunger |
| JEL: | I0 I1 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:6305be67a4f34f559359ecc63c218bb8&r=age |
| By: | John Ameriks; Joseph Briggs; Andrew Caplin; Matthew D. Shapiro; Christopher Tonetti |
| Abstract: | Individuals face significant late-in-life risks, including needing long-term care (LTC). Yet, they hold little long-term care insurance (LTCI). Using both “strategic survey questions,” which identify preferences, and stated demand questions, this paper investigates the degree to which a fundamental lack of interest and poor product features determine low LTCI holdings. It estimates a rich set of individual-level preferences and uses a life-cycle model to predict insurance demand, finding that better insurance would be far more widely held than are products in the market. Comparing stated and model-predicted demand shows that flaws in existing products provide a significant, but partial, explanation for this under-insurance puzzle. |
| JEL: | D14 D91 E21 G22 H31 I13 J14 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22726&r=age |