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on Economics of Ageing |
| By: | Holzmann, Robert (University of New South Wales) |
| Abstract: | Nonfinancial defined contribution (NDC) pension schemes have been successfully implemented since the mid-1990s in a number of European countries such as Italy, Latvia, Norway, Poland, and Sweden. The NDC approach features the lifelong contribution-benefit link of a financial defined contribution (FDC) personal account scheme, but is based on the pay-as-you-go format. At its start-up, the pay-as-you go commitments of the preceding defined benefit (DB) system are converted into individual personal accounts, allowing for a smooth transition from the DB to the DC format, while avoiding the very high transition costs inherent in a move from a traditional pay-as-you-go DB scheme to a fully funded FDC scheme. The NDC approach implemented by the rule book is able to manage the economic and demographic risks inherent to a pension scheme and by design creates financial sustainability. As in any pension scheme, the linchpin between financial stability and adequacy is the retirement age; in the NDC approach the individual retirement age above the minimum age is by design self-selected and by incentives should increase the effective retirement age in line with population aging. As a systemic reform approach NDC has become a strong competitor to piecemeal parametric reforms of traditional nonfinancial DB (NDB) schemes. While frequent, these reforms are far from transparent and usually too timid and too late to create financial sustainability while providing adequate pensions for the average contributor. This paper offers a largely nontechnical introduction to NDC schemes, their basic elements and advantages over NDB schemes, the key technical frontiers of the approach, and the experiences of NDC countries. |
| Keywords: | systemic pension reform, unfunded, individual accounts, Sweden |
| JEL: | H55 J11 J26 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp130&r=age |
| By: | Christl, Michael; Kucsera, Dénes |
| Abstract: | This paper studies actuarial neutrality in the Austrian pension system. It is often argued that actuarial neutrality constitutes an incentive for people to retire. We show that there are almost no financial incentives within the Austrian pension corridor when we use the traditional definition of actuarial neutrality. Taking taxation into account, our results suggest that financial incentives for early retirement stem mainly from the Austrian tax system and not from the pension system itself. |
| Keywords: | Actuarial neutrality,early retirement,pension system,Austria |
| JEL: | J26 H55 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:agawps:01&r=age |
| By: | Akira Kamiguchi (School of Economics, Hokusei Gakuen University); Toshiki Tamai (Graduate School of Economics, Nagoya University) |
| Abstract: | This paper develops an overlapping generations model with debt-financed public investment. The model assumes that the government is subject to the golden rule of public finance and that households are Yaari-Blanchard type. It is shown that the growth-maximizing and utility-maximizing tax rates do not satisfy the Barro tax rule, which is equal to the output elasticity of public capital. Furthermore, we show that both tax rates positively depend on longevity, with an aging population increasing debt per GDP. This result captures a tendency of increasing debt per GDP under population aging in the real world. |
| Keywords: | Public capital, Golden rule of public finance, Economic growth |
| JEL: | H54 H60 O40 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:971&r=age |
| By: | FUKUMURA Koichi; NAGAMACHI Kohei; SATO Yasuhiro; YAMAMOTO Kazuhiro |
| Abstract: | This paper constructs an overlapping generations model wherein people decide their number of children and levels of consumption for differentiated goods. We further assume that immigration takes place according to the difference between the utility inside and outside a country. We show that an improvement in longevity has three effects on the market size and welfare: First, it decreases the number of children. Second, it increases the per capita expenditure on consumption. Finally, it increases immigration. The first effect has negative impacts on market size and welfare whereas the latter two effects have positive impacts. We then calibrate our model to match Japanese and U.S. data from 1955 to 2014 and find that the negative effects dominate the positive ones. Moreover, our counterfactual analyses show that accepting immigration in Japan can be useful in overcoming population and market shrinkage caused by an aging population. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17103&r=age |
| By: | Chae, Seyoung (Sogang University); Heshmati, Almas (Jönköping University, Sogang University) |
| Abstract: | This study investigates the characteristics that contribute to elderly poverty, mainly focusing on individuals' lifetime work experience. It adopts the heterogeneous relative poverty line which differs by gender, province of residence and over time. It calculates the work experience and obtains demographic variables using the Korean Labor and Income Panel Study's survey data for 2006, 2009, 2012 and 2015. The objective is to estimate poverty amongst elderly and explain its variations in relation to individual characteristics and lifetime work experience. Poverty is measured as the head count, poverty gap and the poverty severity indices. The poverty measures are based on the monetary dimensions of well-being namely income and consumption. The methodology used in this study is the logit model to explain incidence of poverty and the sample selection model to analyze the depth and severity of poverty. The results show evidence of a significant selection bias in all the poverty models based on income, but not on the consumption. In both income and consumption models increase in the total work years lessens the incidence of poverty and a decrease in the gap years downsizes the probability of being poor. High-income occupation and labor market participation greatly decrease the incidence of poverty. Most of the work relevant variables become insignificant in the poverty gap and severity models of consumption while both work years and gap years are significant in the income model. The number of jobs representing turnover rate significantly increases the probability of being impoverished only in the consumption model. |
| Keywords: | poverty incidence, poverty gap, poverty severity, lifetime work experience, gap years between jobs, Korea |
| JEL: | E20 I30 I38 J10 N35 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10909&r=age |