nep-age New Economics Papers
on Economics of Ageing
Issue of 2017‒03‒19
seventeen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Social Insurance and Retirement: A Cross-Country Perspective By Tobias Laun; Johanna Wallenius
  2. Labor Market Effects of Pension Reform: An Overlapping Generations General Equilibrium Model Applied to Tunisia By Mouna Ben Othman; Mohamed Ali Marouani
  3. Changing incentives for early retirement - Causal evidence from a cohort based pension reform By Geyer, Johannes; Engels, Barbara; Haan, Peter
  4. Closing the gender gap in pensions. A microsimulation analysis of the Norwegian NDC pension system By Elin Halvorsen; Axel West Pedersen
  5. Late-Life Living Arrangments and Intergenerational Ties in Egypt: Elderly Socio-Economic Conditions from Labor Market Surveys By Aurora Angeli
  6. Fully Funded Social Security Pensions, Lifetime Risk and Income By Laps, Jochen
  7. Poverty and Inequality in Israel: An International Perspective By Haim Bleikh
  8. Skills, Aging, and Productivity: Evidence from Panel Data By Kotschy, Rainer; Sunde, Uwe
  9. Determinants of Contribution Density of the Tunisian Pension System: a Cross Sectional Analysis By Mehdi Ben Braham; Mohamed Ali Marouani
  10. The labor market effect of demographic change: Alleviation for financing social security By Friese, Max
  11. Do Pensions Reduce the Incentive to Work? Evidence From Egypt By Mohamed Arouri; Cuong Viet Nguyen
  12. Formation and realisation of moving intentions across the adult life course By Lars Dommermuth; Sebastian Klüsener
  13. A Head-to-Head Comparison of Augmented Wealth in Germany and the United States By Timm Bönke; Markus M. Grabka; Carsten Schröder; Edward N. Wolff
  14. Paying ‘Til it Hurts: High Medical Spending among the Poor and Elderly in Ten Developed Countries By Katherine Baird
  15. The Mental and Physical Burden of Caregiving By Stroka, Magdalena
  16. How can we finance our pensions? By José Mª Durán-Cabré; José Ignacio Conde-Ruiz; Valeria Merlo; Andrew Reilly1
  17. Longevidad y Pensiones: una Propuesta de Seguro para la Cuarta Edad By Guillermo Larrain; Simon Ballesteros; Sebastián Garci

  1. By: Tobias Laun; Johanna Wallenius
    Abstract: We study the role of old-age pensions, disability insurance and healthcare in accounting for the differing labor supply patterns of older individuals across countries. We develop a life cycle model of labor supply and health with heterogeneous agents. In our framework, people choose when to stop working and when/if to apply for disability and pension benefits. We find that the incentives faced by older workers differ hugely across countries. In fact, based solely on differences in social insurance programs, the model predicts even more cross-country variation in the employment rates of people aged 55-69 than we observe in the data.
    Keywords: Life cycle, Retirement, Disability insurance, Health
    JEL: E24 J22 J26
    Date: 2016–06
  2. By: Mouna Ben Othman; Mohamed Ali Marouani (Paris 1 Pantheon-Sorbonne University)
    Abstract: This paper develops an overlapping general equilibrium framework to capture the interactions among pension reform, labor market and inter-generational distribution issues in Tunisia. The impact on the labor market is addressed at the aggregate level but also by distinguishing different age categories. The three reform scenarios implemented to reduce the social security deficit consist in increasing social security contributions, reducing the replacement rate and postponing the retirement age. The main result obtained is that increasing contribution rates is the worst solution in terms of welfare and unemployment, particularly for the youth. The best option is postponing the retirement age. Contrary to the traditional wisdom, it does not entail an increase of youth unemployment. For the two scenarios where aggregate welfare increases, the middle-aged are those that benefit the most from the reforms.
    Date: 2016–06
  3. By: Geyer, Johannes; Engels, Barbara; Haan, Peter
    Abstract: In this paper we exploit a cohort specific pension reform to estimate the causal employment effect of changes in the financial incentives to retire. In particular we analyze the effect of the introduction of pension deductions for early retirement on female employment. For the empirical analysis we use high-quality administrative data from the German Federal Pension Insurance (VSKT) and find positive and significant effects of the reform on employment.
    JEL: J18 J26 J14
    Date: 2016
  4. By: Elin Halvorsen; Axel West Pedersen (Statistics Norway)
    Abstract: In this paper we use an advanced micro-simulation model to study the distributional effects of the reformed Norwegian pension system with a particular focus on gender equality. The reformed Norwegian system is based on the NDC-formula with fixed contribution/accrual rates over the active life-phase and with accumulated pension wealth being transformed into an annuity upon retirement. A number of redistributive components are built into the system that makes it deviate from complete actuarial fairness: a unisex annuity divisor, a ceiling on annual earnings, generous child credits, a possibility for widows/widowers to inherit pension rights from a deceased spouse, a targeted guarantee pensions with higher benefit rates to single pensioners compared to married/cohabitating pensioners, and finally the tax system that is particularly progressive in its treatment of pensioners and pension income. Taking complete actuarial fairness as the point of departure, we conduct a stepwise analysis to investigate how these different components of the National Insurance pension system impact on the gender gap in pensions and on inequality in the distribution of pension income within a cohort of pensioners.
    Keywords: Pensions; Gender gap; Inequality; Micro simulation
    JEL: D31 E47 H55
    Date: 2017–01
  5. By: Aurora Angeli (University of Bologna)
    Abstract: The aim of this paper is to analyze dynamics in the late-life living arrangements and changes in socio-economic and health condition of the elderly in Egypt in recent years. Research questions refer to the determinants of ageing in Egypt and to the disparities existing and emerging at the gender and place of residence levels. Our focus is on the role intergenerational ties and transfers, both public and within the family, have in alleviating the precarious situations of older persons. This paper intends to help fill the gap in the study of this topic, which is still understudied in the country as well as in the MENA area more generally. The research refers to individual data from all three rounds of the Egypt Labor Market Panel Surveys (ELMPS), carried out in 1998, 2006, and 2012.
    Date: 2015–11
  6. By: Laps, Jochen
    Abstract: The paper analyzes the welfare consequences of insuring mortality risk by means of standard, fully funded Social Security pensions when individuals wish to make transfers to their heirs. In the presence of uninsured mortality risk, within-family transfers depend on realized lifespan. While Social Security crowds out private transfers, it provides transfer insurance and insurance of the ex ante risk of future generations inheriting a particular amount of transfer wealth. We find that, once ex ante insurance is taken into account, Social Security is welfare improving over the long-run as long as capital is not too productive and the transfer motive is not too strong. Altruists gain far less from Social Security than egoists.
    JEL: D91 E61 H55
    Date: 2016
  7. By: Haim Bleikh
    Abstract: This chapter examines the rates of poverty and inequality in Israel over time and in comparison with other OECD countries. It looks at two main groups: those aged 59 and under and those aged 66 and over. In the age 59 and under population, Israel’s poverty and inequality rates are among the highest relative to other developed countries in both market income (household income from work, occupational pensions and capital, before taxes) and gross disposable income (including transfer payments) minus taxes. From 2002-2011, employment rates among the population in Israel rose, leading to a reduction in market income inequality (though this was not accompanied by a substantial decline in poverty rates). Disposable income inequality rates rose until 2006 and have since stabilized, while poverty rates have increased fairly consistently, especially among Arab Israelis and Haredim. Among the retirement-age population, disposable income poverty rates are substantially higher than in OECD countries. Nevertheless, the overall resources (public and private pension arrangements) that are available to the elderly, place Israel in a relatively good position among the developed countries. That is, the level of public and private pensions is not low compared to the rest of the world, but its distribution among the elderly is not equitable. The relative tax revenues in Israel are among the lowest in the Western world, and this is one of the reasons that the average overall public expenditure is relatively low. This inseparable relationship between tax revenues and public expenditure has critical implications for the closing of poverty gaps.
    Date: 2016–02
  8. By: Kotschy, Rainer; Sunde, Uwe
    Abstract: The demographic change is one of the most important challenges for many developed economies in the twenty-first century. This paper examines the effect of workforce demographics and the distribution of skills on aggregated productivity and output. Population aging may lead to secular stagnation in developed economies. We provide estimates for an upper boundary of the skills-aging-elasticity that describes how much human capital is required to increase in order to offset negative effects of aging in the most favorable setting.
    JEL: J11 O47 J10
    Date: 2016
  9. By: Mehdi Ben Braham; Mohamed Ali Marouani (Université Paris 1-Panthéon-Sorbonne, DIAL and ERF)
    Abstract: This paper presents an analysis of pension coverage in Tunisia based on density contribution. This approach is justified by the fact that coverage rates usually used do not give a clear indication on effective contribution and particularly couldnot explain the low level of pensions in the private sector. Using administrative data, we compute the contribution densities for the private sector most important regimes. We then use an ordered PROBIT model to identify the determinants of this ratio. Results show that contribution density of the most vulnerable groups is very low compared to other workers. Women are more likely to contribute to the pension system and contribution density decreases with firms’ size.
    Date: 2016–05
  10. By: Friese, Max
    Abstract: The paper shows the effect of demographic change on per capita burden of financing a PAYG social security system in the standard OLG model with a frictional labor market. Rising longevity and decreasing fertility both induce a rise in the employment level via increased capital accumulation and job openings. Simulations of the theoretical model show that this labor market effect indirectly crowds out part of the initial demographic shock's direct impact on per capita financing burden. This holds true for the generation at the period of impact as well as for the following generations.
    JEL: H55 J11 E24
    Date: 2016
  11. By: Mohamed Arouri (Universiti d'Auvergne & EDHEC Business School, France); Cuong Viet Nguyen
    Abstract: In this study, we investigate the impact of the receipt of contributory and social pensions on labor supply in Egypt using fixed-effects regressions and panel data from the Egypt Labor Market Panel Surveys in 2006 and 2012. We find that the receipt of contributory pension reduces the probability of working of people aged 15 to 60 as well as people above 60 years old. We also find a differential impact of contributory pensions. When living in a household with pensions, males, urban people, and those with high levels of education are less likely to work than females, rural people, and ones with low levels of education. Regarding the receipt of social pensions, it has no significant effects on the probability of working. A possible reason is that social pensions are remarkably lower than contributory pensions, and the small amount of social pensions is not enough to reduce the working incentive.
    Date: 2016–06
  12. By: Lars Dommermuth; Sebastian Klüsener (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: In the theoretical discussion on migration and moving behaviour, it is frequently argued that life course events such as the birth of a child or entry into retirement can act as potential triggers for moving decisions. However, in order to fully understand moving behaviour, it is important to examine not just people’s actual life course and moving events, but also their prior plans, as not all life course intentions and potentially related moving intentions are realised. In this paper, we analyse representative data for Norway that provide us with a rare opportunity to study these issues empirically. For the purposes of our study, we linked information from the Norwegian Generations and Gender Survey (GGS) with follow-up data from the Norwegian population register. The GGS is a representative life course survey that covers the adult population of Norway. It provides rich information on intentions in a broad range of life domains. In our multivariate analyses, we distinguish three life phases: the young adult phase, the family phase, and the retirement phase. Our outcomes confirm existing findings that moving intentions are highly predictive of subsequent behaviour. For all three life phases, we obtain highly significant associations between intentions in various life domains and moving intentions. In line with the theoretical framework, we find that the relationship between these intentions and subsequent moving behaviour is relatively weak, while the subsequent occurrence of life course events is more strongly related to actual moves.
    Keywords: Norway, decision making, life cycle, migration, migration determinants, residential mobility
    JEL: J1 Z0
    Date: 2017–03
  13. By: Timm Bönke; Markus M. Grabka; Carsten Schröder; Edward N. Wolff
    Abstract: We provide levels of, compositions of, and inequalities in household augmented wealth – defined as the sum of net worth and pension wealth – for two countries: the United States and Germany. Pension wealth makes up a considerable portion of household wealth: about 48% in the United States and 61% in Germany. The higher share in Germany narrows the wealth gap between the two countries: While average net worth in the United States (US$337,000 in 2013) is about 1.8 times higher than in Germany, augmented wealth (US$651,000) is only 1.4 times higher. Further, the inclusion of pension wealth in household wealth reduces the Gini coefficient from 0.892 to 0.701 in the United States and from 0.765 to 0.511 in Germany.
    Keywords: net worth, pension wealth, augmented wealth, wealth portfolio, SOEP, SCF
    JEL: D31 H55 J32
    Date: 2017
  14. By: Katherine Baird
    Abstract: This paper measures high medical expenses in ten developed countries, both overall and by income and age, providing some of the best evidence to date on the extent of high medical spending across and within countries. Using comparable household-level data on out-of pocket (OOP) medical expenditures made available through the Luxembourg Income Study (LIS), we measure high spending when it exceeds a threshold share of household income. The results show that the U.S. is far from alone in its failure to protect individuals from large medical expenses. In five of the other nine countries, one-quarter or more of poor households devoted at least 5 percent of household income to OOP expenses. The rate of high spending in the US is similar to Japan’s, but below that in Russia, Poland, Israel, and Switzerland. The high levels of exposure to large medical expenses in most countries indicates the need to develop robust measures of excessive spending that capture both future risk as well as past burdens.
    Keywords: out of pocket spending, health care financing, financing equity, comparative health policy
    Date: 2016–02
  15. By: Stroka, Magdalena
    Abstract: This study evaluates the mental and physical strain experienced by informal caregivers. Econometric problems due to individuals selecting themselves in to informal care provision are tackled by using informative and detailed data from the largest sick ness fund in Germany and applying propensity score matching techniques. The fi ndings suggest tha t carers take more psychoactive drugs as well as analgesics and gastrointestinal agents. Thus, in formal caregiving appears to be a burdensome task with implications for both mental and physical health.
    JEL: I10 D10 J10
    Date: 2016
  16. By: José Mª Durán-Cabré (Universitat de Barcelona & IEB); José Ignacio Conde-Ruiz (Universidad Complutense de Madrid & FEDEA); Valeria Merlo (University of Tübingen); Andrew Reilly1 (University of Tübingen)
    Date: 2016
  17. By: Guillermo Larrain; Simon Ballesteros; Sebastián Garci
    Abstract: Una de las principales falencias del sistema de pensiones chileno es el bajo monto de pensiones. En este artículo se presenta una propuesta de reforma al sistema que divide en dos etapas el periodo de jubilación, la tercera y la cuarta edad, que serían financiadas con instrumentos distintos: ahorro y seguro. El pilar de ahorro mantiene la misma estructura actual con la diferencia que la desacumulación de fondos se realiza sólo hasta la esperanza de vida a la edad de jubilación. Posteriormente, un seguro de longevidad financiaría las pensiones de los afiliados con cargo a una cotización o prima adicional a los ingresos laborales de los trabajadores activos. Este sistema no sólo tiene el potencial de aumentar la pensión de manera directa - por la mayor tasa de cotización y menor tiempo de cobertura – sino que tiene el potencial de gestionar de mejor manera el riesgo de longevidad que afecta crecientemente a todos los esquemas previsionales. Se analizan tres alternativas institucionales para proveer este seguro: sistema de reparto puro, un fondo para la cuarta edad y una compañía de seguros. Esta propuesta permite aumentar en el corto plazo las pensiones de los actuales y los futuros pensionados en un promedio de 24% con una cotización adicional (o prima para el caso de la compañía de seguros) calculada entre un 2% y un 4% dependiendo de la estructura seleccionada. Finalmente se analizan posibles efectos distributivos y se discuten alternativas para enfrentarlos.
    Date: 2017–03

This nep-age issue is ©2017 by Claudia Villosio. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.