nep-age New Economics Papers
on Economics of Ageing
Issue of 2017‒03‒05
seven papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Ho to Delay Labor Market Exit and Pension Claiming? By Staubli, Stefan; Lalive, Rafael
  2. The expansion of economic protection for older adults in Latin America: Key design features of non-contributory pensions By Camila Arza
  3. Demographics and inflation By Bobeica, Elena; Nickel, Christiane; Lis, Eliza; Sun, Yiqiao
  4. Pensions and Fertility: Back to the Roots By Fenge, Robert; Scheubel, Beatrice
  5. Pricing annuities: The role of taxation in retirement decisions By Bütler, Monika; Ramsden, Alma
  6. Effects of digital engagement on the quality of life of older people By Jacqueline Damant; Martin Knapp; Paul P. Freddolino; Daniel Lombard
  7. The Potentiality of Community Currencies in Japan with a Low Birthrate and an Aging Population (Japanese) By FUJI Kazuhiko

  1. By: Staubli, Stefan; Lalive, Rafael
    Abstract: Understanding labor market exit and pension claiming is central to pension reform. We study a Swiss reform delaying access to a full retirement pension by two years, from 62 to 64 years, by reducing early pensions by 3.4 % initially, then by 6.8 %, per year of early claiming. We find that increasing the full retirement age (FRA) by one year delays labor market exit by 4 to 6 months, affecting women who leave the labor force at the FRA. Increasing the FRA by one year delays claiming of retirement benefits by 6 to 8 months. Doubling the early retirement penalty, from 3.4% to 6.8%, delays pension claiming by almost 4 months but has no effect on labor market exit. Raising the FRA lowers social security benefits and social security wealth, by about 3 %. Doubling the early retirement penalty neither affect benefits nor social security wealth. An FRA that acts as a default retirement age generates strong effects on work and pension decisions.
    JEL: H55 J21 J26
    Date: 2016
  2. By: Camila Arza
    Abstract: Over the past two decades, many Latin American countries have expanded the economic protection of older adults by developing non-contributory pensions or making eligibility rules more flexible. These policies have addressed long-standing coverage gaps in Latin American pension systems and contributed to incorporating a large number of older adults in the social protection system. The paper examines the main design features of non-contributory pensions and how they interact with pre-existing contributory systems. It identifies the different types of coverage expansion strategies across Latin America and discusses three different country experiences—Argentina, Bolivia, and Colombia—in greater detail.
    Date: 2017
  3. By: Bobeica, Elena; Nickel, Christiane; Lis, Eliza; Sun, Yiqiao
    Abstract: Most euro area countries have entered an unprecedented ageing process: life expectancy continues to rise and fertility rates have declined, while retirement age in the last twenty to thirty years hardly increased. This implies an ever smaller fraction of the working age population in total population, leading to changes in consumption and saving behaviours and having an important impact on the macroeconomy. In this paper we focus on the relationship between demographic change and inflation. We find that based on a cointegrated VAR model there is a positive long-run relationship between inflation and the growth rate of working-age population as a share in total population in the euro area countries as a whole, but also in the US and Germany. We also find that this relation is mitigated by the effect of monetary policy, which we account for by including the short-term interest rate in our analysis. One caveat of the analysis could be that the empirical relationship as found does not sufficiently take into account changes in policy settings following the high inflation experiences in the 1970s. Our findings support the view that demographic trends are among the forces that shape the economic environment in which monetary policy operates. This is particularly relevant for countries, like many in Europe, that face an ageing process. JEL Classification: E31, J11, C22
    Keywords: cointegration, demographic change, inflation
    Date: 2017–01
  4. By: Fenge, Robert; Scheubel, Beatrice
    Abstract: Fertility has long been declining in industrialised countries and the existence of public pension systems is considered as one of the causes. This paper provides detailed evidence on the mechanism by which a public pension system depresses fertility, based on historical data. Our theoretical framework highlights that the effect of a public pension system on fertility is ex ante ambiguous while its size is determined by the internal rate of return of the pension system. We identify an overall negative effect of the introduction of pension insurance on fertility using regional variation across 23 provinces of Imperial Germany in key variables of Bismarck's pension system, which was introduced in Imperial Germany in 1891. The negative effect on fertility is robust to controlling for the traditional determinants of the first demographic transition as well as to other policy changes.
    JEL: H55 J13 N33
    Date: 2016
  5. By: Bütler, Monika; Ramsden, Alma
    Abstract: This paper investigates the role of taxation in individual annuitization decisions by exploiting differences in relative taxation between the one-off lump sum payment and the life-long annuity. In a first step taxes are imputed for both the lump sum and the annuity for each individual whose retirement choice is recorded in an administrative dataset from a large Swiss pension fund. Using a variety of measures of taxation we show that taxes can explain a significant part of the variation in annuity rates. Furthermore, exploiting kinks in the tax schedule within a regression discontinuity framework we find evidence for tax optimization strategies by individuals. The results of this paper suggest that individuals react strongly to tax incentives when making retirement choices.
    JEL: D91 H24 J26
    Date: 2016
  6. By: Jacqueline Damant; Martin Knapp; Paul P. Freddolino; Daniel Lombard
    Abstract: It is often asserted that older people's quality of life (QOL) is improved when they adopt information and communication technology (ICT) such as the Internet, mobile phones and computers. Similar assumptions are made about older people's use of ICT-based care such as telecare and telehealth. To examine the evidence around these claims, we conducted a scoping review of the academic and grey literature, coving the period between January 2007 and August 2014. A framework analysis approach, based on six domains of QOL derived from the ASCOT and WHOQOL models, was adopted to deductively code and analyse relevant literature. The review revealed mixed results. Older people's use of ICT in both mainstream and care contexts has been shown to have both positive and negative impacts on several aspects of QOL. Studies which have rigorously assessed the impact of older people's use of ICT on their QOL mostly demonstrate little effect. A number of qualitative studies have reported on the positive effects for older people who use ICT such as email or Skype to keep in touch with family and friends. Overall, the review unearthed several inconsistencies around the effects of older people's ICT use on their QOL, suggesting that implicit agreement is needed on the best research methods and instrumentation to adequately describe older people's experiences in today's digital age. Moreover, the available evidence does not consider the large number of older people who do not use ICT and how non-use affects QOL.
    Keywords: nternet; older people; quality of life; technology; telecare; telehealth
    JEL: L91 L96
    Date: 2016–02–16
  7. By: FUJI Kazuhiko
    Abstract: In Japan with its low birthrate and an aging population, people are having difficulty in building relationships with each other. Families are losing their traditional roles, and local communities have not been revitalized yet. In such circumstances, community currencies are effective in turning things around as money plays the role as the lubricating oil of relationships in Japanese society. During the Edo period, community currencies (hansasu) contributed to the revitalization of regional economies. Since the war ended, community currencies have become unfamiliar to Japanese people. Thanks to the application of blockchains (digital currencies), the cost of flotation of community currencies have lowered dramatically. Furthermore, legal and tax problems have been solved. Companies which pay attention to the potentiality of community currencies have begun to introduce this as a means of revitalizing the regional economies. From the viewpoint of the welfare of regional societies, local governments should take the initiative in managing community currencies and stimulate the organization of multi-layer communities. To strengthen confidence in community currencies, a mechanism that reflects the demand of residents should be structured. Such policy is essential as the first step toward a true local autonomy.
    Date: 2017–01

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