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on Economics of Ageing |
| By: | Krzysztof Makarski (Group for Research in Applied Economics (GRAPE); Warsaw School of Economics; Narodowy Bank Polski); Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw) |
| Abstract: | We analyze the political stability social security reforms which introduce a funded pillar (a.k.a. privatizations). We consider an economy populated by overlapping generations, which introduces a funded pillar. This reform is efficient in Kaldor-Hicks sense and has political support. Subsequently, agents vote on abolishing the funded system and replacing it with the pay-as-you-go scheme, i.e. “unprivatizing” the pension system. We show that even if abolishing the system reduces welfare in the long run, the distribution of benefits across cohorts along the transition path implies that “unprivatizing” social security is always politically favored. This suggests that property rights definition over retirement savings may be of crucial importance for determining the stability of retirement systems with a funded pillar. |
| Keywords: | majority voting, pension system reform, welfare |
| JEL: | H55 D72 C68 E17 E27 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:fme:wpaper:14&r=age |
| By: | Lammers, Marloes (Vrije Universiteit Amsterdam); Bloemen, Hans (Vrije Universiteit Amsterdam); Hochguertel, Stefan (Vrije Universiteit Amsterdam) |
| Abstract: | This paper makes use of a natural experiment to examine effects of potential capital losses and general attractiveness of pension schemes on employees' propensity to change jobs. On January 1st 2004, the two largest pension funds in the Netherlands, for civil servants and for the health care sector, changed their pension scheme from a final salary to an average salary. This industry-level change excludes the possibility that a negative correlation between having a job with an attractive pension scheme and the number of labour market transitions is driven by self-selection of workers into jobs with an attractive pension arrangement. Using individual data covering the entire Dutch population, we estimate discrete choice models for job-to-job transitions. The results show that the number of job transitions of civil servants significantly increased at the onset of the new pension rules. The changing pension rules affected the propensity to change jobs for individuals working in the health care sector only to a smaller extent. |
| Keywords: | discrete choice models, policy evaluation, labour market flexibility, pension systems |
| JEL: | C35 J26 J32 J63 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10840&r=age |
| By: | Atal, Juan Pablo (University of Pennsylvania); Fang, Hanming (University of Pennsylvania); Karlsson, Martin (University of Duisburg-Essen); Ziebarth, Nicolas R. (Cornell University) |
| Abstract: | We study theoretically and empirically how consumers in an individual private longterm health insurance market with front-loaded contracts respond to newly mandated portability requirements of their old-age provisions. To foster competition, effective 2009, the German legislature made the portability of standardized old-age provisions mandatory. Our theoretical model predicts that the portability reform will increase internal plan switching. However, under plausible assumptions, it will not increase external insurer switching. Moreover, the portability reform will enable unhealthier enrollees to reoptimize their plans. We find confirmatory evidence for the theoretical predictions using claims panel data from a big private insurer. |
| Keywords: | individual private health insurance, portability, old-age provisions, health plan switching, switching costs, health policy reform, consumer bargaining, retention |
| JEL: | G22 I11 I18 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10871&r=age |
| By: | D. Dragone; H. Strulik |
| Abstract: | Although death occurs with certainty, the time of death is uncertain. In this paper we build on this conceptualization and show that, although life ends at some point in time, human life can be meaningfully conceptualized as a strive for immortality that is never reached. We consider an intertemporal problem where health investments and consumption choices are made, taking into account that mortality depends on environmental factors, which are not controlled by the agent, and the agent's health condition, which is endogenous to lifestyle and health behavior. Formally, the infinite horizon approach has the advantage that adjustment dynamics to the steady state (i.e. human aging) can be discussed analytically. We explore the determinants of health deficits in this framework and show how individuals choose consumption and health expenditure over their lifetime in order to slow down (biological) aging. We compute analytically the impulse response functions for unexpected parameter changes. Specifically, we investigate how higher prices for medical goods and advancing medical technology affect individual behavior and health deficit accumulation. |
| JEL: | D91 I12 J17 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1104&r=age |
| By: | Lee, Wang-Sheng (Deakin University); McKinnish, Terra (University of Colorado, Boulder) |
| Abstract: | We investigate how the marital age gap affects the evolution of marital satisfaction over the duration of marriage using household panel data from Australia. We find that men tend to be more satisfied with younger wives and less satisfied with older wives. Interestingly, women likewise tend to be more satisfied with younger husbands and less satisfied with older husbands. Marital satisfaction declines with marital duration for both men and women in differently-aged couples relative to those in similarly-aged couples. These relative declines erase the initial higher levels of marital satisfaction experienced by men married to younger wives and women married to younger husbands within 6 to 10 years of marriage. A possible mechanism is that differently-aged couples are less resilient to negative shocks compared to similarly-aged couples, which we find some supportive evidence for. |
| Keywords: | assortative matching, marital age gap, marital duration, marital satisfaction |
| JEL: | D1 J12 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10863&r=age |
| By: | Andrew Clare; James Seaton; Peter N. Smith; Stephen Thomas |
| Abstract: | We examine the consequences of alternative popular investment strategies for the decumulation of funds invested for retirement through a defined contribution pension scheme. We examine in detail the viability of specific ‘safe’ withdrawal rates including the ‘4%-rule’ of Bengen (1994). We find two powerful conclusions; first that smoothing the returns on individual assets by simple trend following techniques is a potent tool to enhance withdrawal rates. Secondly, we show that while diversification across asset classes does lead to higher withdrawal rates than simple equity/bond portfolios, ’smoothing’ returns in itself is far more powerful a tool for raising withdrawal rates. in fact, smoothing the popular equity/bond portfolios (such as the 60/40 portfolio) is in itself an excellent and simple solution to constructing a retirement portfolio. Alternatively, trend following enables portfolios to contain more risky assets, and the greater upside they offer, for the same level of overall risk compared to standard portfolios. |
| Keywords: | Sequence Risk; Perfect Withdrawal Rate; Decumulation; Trend Following. |
| JEL: | G10 G11 G22 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:17/06&r=age |
| By: | Paul Andres Rodriguez-Lesmes |
| Abstract: | This study estimates the potential impact of early diagnosis programmes on medication, subjective health and lifestyle. To deal with potential selection bias due to screening, I employ a feature of the English Longitudinal Study of Ageing that motivates a regression discontinuity design based on respondents’ blood pressure. If their measurements are above a threshold, individuals are advised to visit their family doctor to check for high blood pressure. There is evidence of a temporal increase in use of medication for treating the condition (6.6 percentage points), which almost doubled in the proportion of people taking medication for such blood pressure levels. At the same time, there is a permanent reduction of the probability of consuming alcohol twice a week (10 percentage points) and an increase in fruits consumption. However, there is also evidence of higher smoking frequency (eight cigarettes per week) in those above the threshold. Such lifestyle responses are not related to extra medication. However, no clear effects on either objective or subjective health were found after 4 years of intervention. |
| Keywords: | Hypertension; Biomarkers; Health behaviours; Health investment;Prevention |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:015639&r=age |
| By: | Barigozzi, Francesca; Cremer, Helmuth; Roeder, Kerstin |
| Abstract: | Daughters are the principal caregivers of their dependent parents. In this paper, we study long-term care (LTC) choices by bargaining families with mixed- or same-gender siblings. LTC care can be provided either informally by children, or formally at home or in an institution. A social norm implies that daughters suffer a psychological cost when they provide less informal care than the average child. We show that the laissez-faire (LF) and the utilitarian first-best (FB) differ for two reasons. First, because informal care imposes a negative externality on daughters via the social norm, too much informal care is provided in LF. Second, the weights children and parents have in the family bargaining problem might differ in general from their weights in social welfare. We show that the FB allocation can be achieved through a system of subsidies on formal home and institutional care. Except when children and parents have equal bargaining weights these subsidies are gender-specific and reflect Pigouvian as well as "paternalistic" considerations. |
| Keywords: | Social norms; formal and informal LTC; daughters; sons |
| JEL: | D13 H23 H31 I19 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:31797&r=age |