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on Economics of Ageing |
| By: | Robert L. Clark; Robert G. Hammond; Melinda S. Morrill; David Vanderweide |
| Abstract: | Social Security Leveling is an annuity option that allows participants to receive a level income before and after age 62. The retiree receives a larger pension benefit prior to age 62, but then the pension benefit is lowered at age 62 when the individual is expected to claim Social Security benefits. This option is not uncommon in public pension plans, yet little is known about how this option is used in practice and its impact on well-being in retirement. Our study uses a combination of administrative records and survey data from recent North Carolina public sector retirees. We find that one-third of all retirees selecting a single life annuity between 2009 and 2014 opted for Social Security Leveling. The evidence suggests that individuals are choosing this option in a way that is consistent with their stated preferences and a consumption smoothing motive. However, we also see higher rates of ex post “regret” in the annuity choice among those choosing the level income option. |
| JEL: | H55 J26 J38 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23262&r=age |
| By: | Alicia H. Munnell; Wenliang Hou; Anthony Webb; Yinji Li |
| Abstract: | Employer-sponsored retirement plans have shifted dramatically in recent decades from defined benefit (DB) to defined contribution (DC) plans. Although theoretical calculations show that participants in 401(k) and other DC plans who stay the course can accumulate substantial account balances, many studies have documented how such plans often fall short. This shortfall reflects a failure of workers to participate, inadequate contribution rates, leakages, poor investment choices, and subpar market returns. On the other hand, while DB plans provide generous benefits for workers who spend most of their career with a single employer, the pensions of job-hoppers are eroded by inflation and those who separate prior to vesting receive nothing. Therefore, the net effect of the shift from DB to DC plans on retirement wealth and income is unclear. This brief, adapted from a recent paper, uses the Health and Retirement Study (HRS) to document the amount and distribution of retirement wealth, the amount of retirement income it produces, and the pattern of replacement rates for households ages 51-56 in 1992, 1998, 2004, and 2010. The discussion proceeds as follows. The first section describes the data and presents trends in retirement plan coverage. The second section explores whether workers in 2010, when DC plans dominated, had more or less retirement wealth in employer plans than their counterparts in 1992, when DB plans dominated. It also reports how that wealth was distributed by education. The third section shifts the focus from wealth to income. It shows the impact of moving from DB plans, where annuities are actuarially fair, to DC plans, where annuities must be purchased on the open market; and it examines the pattern of replacement rates over time. The final section concludes with four observations. First, retirement wealth has been relatively steady or declining, depending on whether the starting year is 1992 or 1998. Second, DC wealth is more concentrated in the top quartile of education than DB wealth, and this concentration will become more evident in the aggregate wealth measure as the shift from DB to DC plans evolves. Third, the shift from DB to DC has reduced the amount of retirement income per dollar of wealth because DC participants have to pay more for annuities, and annuity rates fell as interest rates dropped. Fourth, even with later retirement ages, steady retirement income combined with rising wages has produced declining replacement rates. Thus, retirement income from employer plans has been contracting. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2017-5&r=age |
| By: | Tim Muir (OECD) |
| Abstract: | This report presents the first international quantification and comparison of levels of social protection for long-term care (LTC) in 14 OECD and EU countries. Focusing on five scenarios with different LTC needs and services, it quantifies the cost of care; the level of coverage provided by social protection systems; the out-of-pocket costs that people are left facing; and whether these costs are affordable. The cost of care varies widely between countries but it is always high relative to typical incomes, meaning that LTC is often unaffordable in the absence of social protection. All countries studied have some form of social protection for LTC, but even where coverage is comprehensive, people pay some of the cost out of pocket. Coverage for home care for moderate or severe needs is often insufficient, leaving people with large out-of-pocket costs. In contrast, all countries studied ensure that institutional care is affordable. Unless family and friends can provide informal care, many people will be unable to afford LTC in their own home, leaving them with unmet needs or at risk of early institutionalisation. Benefits are usually means-tested to provide more support to those less able to afford to contribute, but it is still those with lowest incomes that are most likely to face unaffordable costs. Some countries provide financial support to informal carers, but this rarely comes close to compensating them for the time they spend providing LTC. When designing social protection systems for LTC, countries need to look systematically at the level of protection provided to people in different scenarios. Many countries aim to support people with LTC needs to remain in their own home for longer, but the results presented here suggest that gaps in social protection make this unaffordable for people with low income. Addressing these gaps should be a priority for future reforms. |
| JEL: | I13 |
| Date: | 2017–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaad:93-en&r=age |
| By: | Tavares, L.; Zantomio, F.; |
| Abstract: | Despite the sizeable cuts in public healthcare spending, part of the austerity measures recently undertaken in Southern European countries, little attention has been devoted to monitoring distributional aspects of healthcare usage. This study aims at measuring socioeconomic inequities in primary and secondary healthcare experienced some time after the crisis onset in Italy, Spain and Portugal. The analysis, based on data drawn from the Survey of Health, Ageing and Retirement in Europe (SHARE), focuses on older people, who generally face significantly higher healthcare needs, and whose health appeared to have worsened in the aftermath of the crisis. The Horizontal Inequity indexes reveal remarkable socioeconomic inequities in older people’s access to secondary healthcare in all three countries. In Portugal, the one country facing most severe healthcare budget cuts and where user charges apply also to GP visits, even access to primary care exhibits a significant pro-rich concentration. If reducing inequities in older people’s access to healthcare remains a policy objective, austerity measures maybe pulling the Olive belt countries further away from achieving it. |
| Keywords: | Healthcare access; Older People; Horizontal Equity; Concentration Index; |
| JEL: | I13 I14 H51 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:17/06&r=age |
| By: | Timm Bönke; Markus 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. |
| JEL: | D31 H55 J32 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23244&r=age |
| By: | Alserda, G.A.G.; Bikker, J.A.; van der Lecq, S.G. |
| Abstract: | Pension funds’ operating costs come at the cost of benefits, so it is crucial for pension funds to operate at the lowest cost possible. In practice, we observe substantial differences in costs per member for Dutch pension funds, both across and within size classes. This paper discusses scale inefficiency and X-inefficiency using various approaches and models, based on a unique supervisory data set, which distinguishes between administrative and investment costs. Our estimates show large economies of scale for pension fund administrations, but modest diseconomies of scale for investment activities. We also found that many pension funds have substantial X-inefficiencies for both administrative and investment activities. The two kinds of inefficiency differ across types of pension funds. Therefore, most pension funds should be able to improve their cost performance, and hence increase pension benefits. |
| Date: | 2017–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureri:98480&r=age |
| By: | Sean Fahle (State University of New York-Buffalo); Kathleen McGarry (University of California-Los Angeles and NBER) |
| Abstract: | There has been much concern over the provision of long-term care and the stresses it imposes on the family members who provide that care. However, despite the importance of this issue, it has been difficult to assess a causal relationship between caregiving and work. A chief concern is that those with weaker attachments to the labor force may be more willing to provide care—inducing a negative correlation when caregiving itself does not negatively affect employment. In this study we draw on 20 years of data from the Health and Retirement Study to examine anew the relationship between parental caregiving and work. We use two alternative identification strategies: First, we exploit the multiple observations per person existing in our data to estimate a fixed effects model for the relationship between caregiving and work. Second, we use unique data from the Social Security Administration on earnings histories to control for a woman’s labor market behavior long before the potential need to provide care.We find evidence that caregivers have at least a strong, and by some measures a stronger, relationship to the labor market than non-caregivers. Rather than labor force attachment, the provision of care appears to be driven primarily by parental need and by the availability of alternative caregivers, particularly sisters. However, we also find that caregiving has negative long-term effects on employment and earnings and can thus be detrimental to the financial well-being of caregivers. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp356&r=age |
| By: | Aboozar Hadavand |
| Abstract: | This paper provides a novel analysis of the trend in income inequality in the United States between 1979{2013. There are two ways in which this paper contributes to the literature. First, I analyze how much of the existing inequality in the U.S. is due to the demographic changes that happened over this period. Using microdata from Luxembourg Income Study and after decomposing inequality into within- and between-age group components, I find that the within-group share of overall inequality in the U.S. is high and steady compared to other developed countries. I also find that about 17 percent of the rise in inequality in this period is due to the between-group component (life-cycle effects). Second, I provide a regression analysis to explain cross-group variations in inequality during the period. I estimate that most of the rise in inequality has happened among middle-aged men while inequality among women, especially among married women has, in fact, decreased. This more granular analysis of inequality can help us investigate the causes of inequality, which would be impossible if we only look at a single inequality statistic. |
| Keywords: | Inequality Decomposition, Within-Group Inequality, Income Distribution |
| JEL: | D31 J11 D63 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:lis:liswps:686&r=age |
| By: | Martin W. Adler (Free University Amsterdam); Rudiger Ahrend (OECD) |
| Abstract: | Pedestrians are vulnerable in traffic, with frequently reported injuries and fatalities. These risks are believed to be correlated with socio-economic attributes such as age, income or education levels. For Korea, it is shown that elderly pedestrians have a higher mortality risk than other road users. On a municipal level, risk factors are high car ownership, an aging population and low population density; factors associated with rural areas. Some tentative evidence also points to financially stronger municipalities having better traffic safety, which could reflect a larger capacity to maintain roads and implement road safety measures. |
| Keywords: | accident, ageing population, elderly, inclusiveness, Korea, pedestrian, regional, Traffic safety |
| JEL: | C25 H76 R41 |
| Date: | 2017–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaab:2017/3-en&r=age |
| By: | Nella, Athina; Christou, Evangelos |
| Abstract: | The continuous monitoring of market trends is one of the most important roles that marketing scientists and practitioners should fulfill. Tourism is significantly affected by major demographic, cultural and economic trends. In the last few years there is considerable debate on the radical demographic changes taking place around the globe and one of the main issues arousing in many developed and developing countries is this of ageing population. |
| Keywords: | Market segmentation, senior tourism market, ageing population, market targeting, destination marketing organisations |
| JEL: | L83 M1 O1 |
| Date: | 2016–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:77468&r=age |
| By: | Evan Taylor |
| Abstract: | Using a newly constructed dataset that links 2000 U.S. Census long-form records to Social Security Administration data files, I evaluate the effect of college education on mortality. In an OLS regression, women and men who have at least some college education have 20% lower mortality rates than those with a high school degree or less. I proceed with an empirical design intended to illuminate the extent to which this relationship is causal, estimating marginal treatment effects (MTEs) using the proximity of the nearest college to individuals' birthplace as an instrument. Results indicate positive selection into college education (in terms of longevity) for both women and men. Selection drives almost all of the mortality gap for women. For men, longevity gains from college attendance are concentrated among individuals with unobserved variables that make them unlikely attend college. This suggests that men who would benefit most from receiving college education in terms of mortality reductions are those who are not attending. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:17-30&r=age |
| By: | Braun, R. Anton (Federal Reserve Bank of Atlanta); Kopecky, Karen A. (Federal Reserve Bank of Atlanta); Koreshkova, Tatyana (Concordia University) |
| Abstract: | Half of U.S. 50-year-olds will experience a nursing home (NH) stay before they die, and a sizeable fraction will incur out-of-pocket expenses in excess of $200,000. Given the extent of NH risk, it is surprising that only about 10 percent of individuals over age 62 have private long-term care insurance (LTCI). This market also has a number of other puzzling features. Many applicants are denied coverage by insurers. Coverage of those who have insurance is incomplete. Insurance premia are high relative to an actuarily fair benchmark. Using a model that features agents with private information about their NH entry risk and an insurer who optimally chooses menus of LTCI contracts subject to participation and incentive compatibility constraints, this paper shows that these puzzles can be attributed to adverse selection, overhead costs on the insurer, and Medicaid. The model also accounts for the lack of correlation between NH entry and LTCI ownership. This final property is novel because our setup has only one dimension of private information. |
| Keywords: | long-term care insurance; Medicaid; adverse selection; insurance rejections |
| JEL: | E62 H31 H52 H55 |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2017-03&r=age |
| By: | Levi Boxell; Matthew Gentzkow; Jesse M. Shapiro |
| Abstract: | We combine nine previously proposed measures to construct an index of political polarization among US adults. We find that the growth in polarization in recent years is largest for the demographic groups least likely to use the internet and social media. For example, our overall index and eight of the nine individual measures show greater increases for those older than 75 than for those aged 18–39. These facts argue against the hypothesis that the internet is a primary driver of rising political polarization. |
| JEL: | D72 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23258&r=age |
| By: | Abeliansky, Ana; Prettner, Klaus |
| Abstract: | We analyze the effects of declining population growth on the adoption of automation technology. A standard theoretical framework of the accumulation of traditional physical capital and of automation capital predicts that countries with a lower population growth rate are the ones that innovate and/or adopt new automation technologies faster. We test the theoretical prediction by means of panel data for 60 countries over the time span from 1993 to 2013. Regression estimates provide empirical support for the theoretical prediction and suggest that a 1% increase in population growth is associated with approximately a 2% reduction in the growth rate of robot density. Our results are robust to the inclusion of standard control variables, the use of different estimation methods, the consideration of a dynamic framework with the lagged dependent variable as regressor, and changing the measurement of the stock of robots. |
| Keywords: | Automation,Industrial Robots,Demographic Change,Declining Population Growth,Economic Growth |
| JEL: | J11 O14 O33 O40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hohdps:052017&r=age |
| By: | - |
| Abstract: | El Observatorio Demográfico 2016 reúne indicadores seleccionados de la revisión de 2016 de las estimaciones y proyecciones de la población nacional, urbana, rural y económicamente activa. Las cifras contenidas en esta publicación constituyen una revisión de las presentadas en el Observatorio Demográfico 2015. En esta oportunidad, se actualizaron las estimaciones y proyecciones de la población económicamente activa desde 1980 hasta 2050, considerando la nueva información disponible en CEPALSTAT, a partir de tabulaciones especiales de las encuestas de hogares y de los nuevos censos de población. Además, se desarrolló una nueva metodología para identificar los cambios en la fuerza de trabajo resultantes de la dinámica demográfica y las tendencias de la participaciónen la actividad económica por sexo, edad y área de residencia desde un punto de vista demográfico. Como es habitual, se incluye un capítulo analítico en el que se señalan los efectos de la dinámica demográfica en la fuerza de trabajo. En las notas técnicas de este Observatorio se enumeran las fuentes de datos consideradas para cada país. |
| Keywords: | POBLACION, PROYECCIONES DE POBLACION, ESTADISTICAS DEMOGRAFICAS, DINAMICA DE LA POBLACION, DISTRIBUCION DE LA POBLACION, MANO DE OBRA, POPULATION, POPULATION PROJECTIONS, DEMOGRAPHIC STATISTICS, POPULATION DYNAMICS, POPULATION DISTRIBUTION, MANPOWER |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col044:41018&r=age |