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on Economics of Ageing |
| By: | Martin Stepanek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic) |
| Abstract: | Unsustainability of pension systems particularly in developed economies looms large on the horizon due to increasing life expectancy and continuous drop in fertility. In spite of a broad awareness of the issues, there is no consensus on appropriate remedy and little action. In this paper, I present a comprehensive OLG model tailored for simulation of pension reforms and calibrated on real-world data that accounts not only for optimising agents but also for productivity shocks and financial market frictions. The model is used for assessment of alternative pension reforms in the Czech Republic, yet many of the conclusions apply to other countries as well. The estimates show that retirement age will need to increase constantly in the next decades in order to maintain the current levels of replacement rates in the existing PAY-GO scheme and that this result is virtually independent of the level of economic growth. On the other hand, a transition towards a fully funded scheme would be extremely costly and while it would improve system's resistance to demographic changes, it would also substantially redistribute wealth in the society and expose pensions to financial markets risks. The best option overall may then be a well designed multipillar pension scheme, which can provide an optimal balance of performance indicators without leading to excessive costs of transition. |
| Keywords: | pension, OLG, simulation, ageing |
| JEL: | H55 H68 I38 J32 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2017_15&r=age |
| By: | Patrick Button (Department of Economics, Tulane University) |
| Abstract: | In this paper I discuss population aging, increased participation of seniors in the labor force in the United States (and reasons for this), and how these trends are making the struggles of older workers in the labor market increasingly policy relevant. I discuss evidence examining if age discrimination, especially age discrimination against older women ("sex-plus-age" discrimination), as a barrier for seniors as they try to increase their work lives through the common practice of "bridge" or "partial retirement" jobs. After discussing the evidence that measures age discrimination, I discuss economics and legal research that seeks to determine to what extent the federal Age Discrimination in Employment Act and state-level age discrimination laws prevent age and "sex-plus-age" discrimination. I conclude that while age discrimination laws seem to help mitigate some age discrimination faced by older men, older women face more age discrimination, and current age discrimination laws do a poor job of protecting older women, who are even more economically vulnerable. |
| Keywords: | Age discrimination, older women, Age Discrimination in Employment Act, population aging, intersectionality |
| JEL: | J71 J78 J14 K31 J16 J26 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1715&r=age |
| By: | Ayşe İmrohoroğlu (University of Southern California); Kai Zhao (University of Connecticut) |
| Abstract: | Most of the studies examining the implications of social security reforms in China use overlapping generations models and abstract from the role of family support. How-ever, in China, family support plays a prominent role in the well-being of the elderly and often substitutes for the lack of government-provided old-age support systems. In this paper, we investigate the impact of social security reform in China in a model with two-sided altruism as well as a pure life-cycle model. We show that the quantitative implications of social security reform are very different across the two models. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2017-18&r=age |
| By: | John B. Shoven; Sita Nataraj Slavov; David A. Wise |
| Abstract: | While research shows that there are large gains in lifetime wealth from delaying claiming Social Security, most people claim at or before full retirement age. We fielded an original, nationally representative survey to gain insight into people’s rationales for their Social Security claiming decisions, their satisfaction with their past claiming decisions, and how they financed any gap between retirement and claiming. Common rationales for claiming Social Security before full retirement age include stopping work, liquidity, poor health, and concerns about future benefit cuts due to policy changes. Claiming upon stopping work and claiming at full retirement age appear to be viewed as social norms. But while Social Security claiming is strongly associated with stopping work, the roughly quarter of the sample who have a gap of two or more years between retirement and claiming used employer-sponsored pensions and other saving to finance the delay. Individuals who claimed at full retirement age are more satisfied with their claiming decisions than individuals who claimed early or delayed. There is little evidence that claiming decisions and rationales for claiming are correlated with financial literacy or knowledge of Social Security rules. |
| JEL: | D14 H55 J26 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23729&r=age |
| By: | Yun Liang (University of Waikato); John Gibson (University of Waikato) |
| Abstract: | China is rapidly aging and the social security system provides insufficient pension coverage. Consequently, almost 80 percent of elderly people depend on their children or other relatives for financial support. We use China Health and Nutrition Survey data to test if more grandchildren adversely affects elder health. This could occur because grandparents and grandchildren compete for financial support from the working adults in a family and because grandparents often have to care for young grandchildren and may neglect their own health. Since the number of grandchildren is a choice variable, we use exogenous variation in fertility for two generations under local implementation of the one child policy. We also take advantage of the panel data to deal with unobservable factors. The health of the elderly appears to be adversely affected by the number of grandchildren, especially for grandmothers and especially in urban areas. |
| Keywords: | elderly; grandchildren; health; one-child policy; China |
| JEL: | I12 J14 |
| Date: | 2017–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:17/18&r=age |
| By: | Philip Armour (RAND Corporation); Michael F. Lovenheim (Cornell University and NBER) |
| Abstract: | This paper examines how older workers adjust their labor supply in response to information they receive about their retirement wealth from the provision of the Social Security Statement. We find that older male workers’ labor supply is highly responsive to receiving personalized information about future Social Security benefits, leading to a reduction of 119 hours worked per year, on average. However, our estimates point to significant heterogeneity in this response, with workers at the lower end of the hours-worked distribution increasing their labor supply and those at the high end decreasing their labor supply. We argue differences in knowledge about Social Security benefits across the labor supply distribution can explain much of this heterogeneity. We additionally explore the extent to which the information on the Statement may have led some workers to mistakenly reduce their labor supply by too much due to a lack of understanding of the dynamic nature of the Statement’s benefit projections with respect to earnings. Receipt of a second Statement led all but the lowest hour workers to increase their labor supply relative to workers who did not receive a second Statement. This is consistent with workers misunderstanding the information provided as accumulated rather than projected wealth. Our results point to older workers being very responsive to Social Security information, which highlights the need to accurately convey information about both pension wealth and its sensitivity to changes in earnings. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp361&r=age |
| By: | Edouard Debonneuil (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1); Stéphane Loisel (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1); Frédéric Planchet (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1) |
| Abstract: | Pension funds that handle retirement risk need to invest assets in a diversified manner, on long durations and if possible while facing interest rate and longevity risk. In the recent years, a new class of investment called a longevity megafund was described, that invests in clinical trials for solutions against age-related diseases. Using simple models, we here study the financial interest for pension funds of investing in a longevity megafund. |
| Date: | 2017–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01571937&r=age |
| By: | Yejin Ha from ESCAP Subregional Office for East and North-East Asia. (United Nations Economic and Social Commission for Asia and the Pacific) |
| Abstract: | East and North-East Asia is experiencing unprecedented population ageing. The combined population of the subregion in 2015 accounted for about 22 per cent of the world’s total population, while the population aged 65 or older in the subregion constituted 29 per cent of older persons worldwide. It is estimated that, by 2035, the share of the older population in the subregion would increase to 31 per cent of the total for East and North-East Asia. Japan has the highest proportion of people aged over 65 in the world, and the country’s population size is already shrinking. Similarly, the pace of population ageing is rapid in China. The proportion of people aged 65 or older in the total population is projected to increase from 6.7 per cent in 2000 to 12.1 per cent in 2020 and 27.6 per cent in 2050. All major economies in the subregion, except Mongolia, are likely to face a declining working-age population after 2020. In comparison, the workingage population in the ASEAN-4 countries (Indonesia, Malaysia, the Philippines and Thailand) will continue to grow and reach a plateau only after 2050. |
| URL: | http://d.repec.org/n?u=RePEc:unt:pbmpdd:pb33&r=age |
| By: | Songül Tolan |
| Abstract: | This paper develops a structural dynamic retirement model to investigate effects and corresponding underlying mechanisms of a partial retirement program on labor supply, fiscal balances, and the pension income distribution. The structural approach allows for disentangling the two counteracting mechanisms that drive the employment effects of partial retirement: 1) the crowding-out from full-time employment, and 2) the movement from early retirement or unemployment to partial retirement. It also allows for investigating the role of financial compensations in a partial retirement program. Based on a unique German administrative dataset, I perform counterfactual policy simulations that analyze the role of partial retirement combined with financial subsidies and an increased normal retirement age. The results show that partial retirement extends working lives but reduces the overall employment volume. The fiscal consequences of partial retirement are negative but substantially less so when wages and pensions in partial retirement remain uncompensated. Partial retirement decreases inequality in pension income and provides a way to smooth consumption especially for retirees in lower income deciles in the context of an increased normal retirement age. |
| Keywords: | Retirement, Partial Retirement, Social Security and Public Pensions, Structural estimation, Dynamic Discrete Choice |
| JEL: | C61 J26 H55 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1679&r=age |
| By: | Drydakis, Nick (Anglia Ruskin University); MacDonald, Peter (Anglia Ruskin University); Bozani, Vasiliki (University of Crete); Chiotis, Vangelis (Anglia Ruskin University) |
| Abstract: | Addressing population ageing requires a rise in the activity rates of older workers. In this study, a field experiment for the period 2013-2015 in the UK, suggests that age discrimination persists at alarming levels. It shows that when two applicants engage in an identical job search, the older applicant would gain fewer invitations for interviews regardless of her/his experience or superiority for the appointment. The results also suggest that older applicants face higher occupational access constraints for blue-collar jobs than white-collar/pink-collar jobs, and that women face greater age discrimination than men. Worryingly, the outcomes suggest that older applicants gain poorer access to vacancies than younger applicants irrespective of written commitments to equal opportunities. The design of the study suggests that discrimination results from distaste for older applicants, which has not been eliminated by the introduction of anti-discrimination legislation. Eliminating ageism in recruitment requires organizations to adopt more inclusive HR policies at the earliest stages of the recruitment process. Social dialogue has a crucial role to play in shaping inclusive and discrimination free recruitment policies such that shared values and beliefs are not age-discriminatory but rather recognize the strengths and potential of workers from different age groups. |
| Keywords: | access to occupations, wages, ageism, women, discrimination |
| JEL: | C93 C9 J14 J1 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10957&r=age |
| By: | Simon Rabaté (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | Retirement is commonly described as a pure labor supply decision, despite the potential importance of the demand side channel. This is partly due to the fact that both dimensions are often di?cult to disentangle. In this paper, I manage to overcome this di?culty by using a unique natural experiment, the progressive ban of mandatory retirement in France in the 2000s. Drawing on an extensive administrative dataset, I use inter-industry reform-induced variations in mandatory retirement legislation, thereby insulating this factor from other determinants of retirement, such as ?nancial incentives. I ?nd that demand-side determinants through mandatory retirement do a?ect retirement patterns: exit rates from employment are estimated to be 6% higher when mandatory retirement is possible. Secondly, as the mandatory retirement age coincides with the full rate age, I exhibit a previously uncovered determinant of the large bunching in retirement distribution at this age. Mandatory retirement is estimated to explain 10% of the observed spike at full rate. |
| Keywords: | Retirement,Employment,Labor demand |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01521150&r=age |
| By: | Heili Hein; Aaro Hazak; Kadri Männasoo |
| Abstract: | It is a known fact from previous studies that on average, women earn less than men. Although the size of the gender pay gap differs from country to country, this statement is true almost everywhere. This brief study aims to contribute to the discussion on the gender pay gap by examining the earnings of a specific demographic – Estonian creative R&D employees. Not surprisingly, we discovered that gender is an important and statistically significant driver of salary levels with women being less likely than men to receive higher levels of salaries. In addition, we find that age is a further statistically significant determinant of salary levels. The effect of age on earnings forms an inverse-U-shape with younger and older employees having a lower likelihood of earning higher salaries compared to their middle-aged colleagues. |
| Date: | 2017–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ttu:tuteco:39&r=age |
| By: | Mathilde Godard (Université Paris-Dauphine, LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine) |
| Abstract: | This paper estimates the causal impact of retirement among the 50-69 year-old on Body Mass Index (BMI), the probability of being either overweight or obese and the probability of being obese. Based on the 2004, 2006 and 2010-11 waves of the Survey of Health, Ageing and Retirement in Europe (SHARE), our identification strategy exploits the European variation in Early Retirement Ages (ERAs) and the stepwise increase in ERAs in Austria and Italy between 2004 and 2011 to produce an exogeneous shock in retirement behaviour. Our results show that retirement induced by discontinuous incentives in early retirement schemes causes a 13 percentage point increase in the probability of being obese among men within a two to four-year period. Additional results show that this effect is driven by men having retired from strenuous jobs and who were already at risk of obesity. No effects are found among women. |
| Keywords: | Body Mass Index, Obesity, Retirement, Instrumental Variables |
| Date: | 2017–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01525000&r=age |
| By: | Svetlana Pashchenko (University of Georgia); Ponpoje (Poe) Porapakkarm (National Graduate Institute for Policy Studies (GRIPS,Tokyo)); Mariacristina De Nardi (Federal Reserve Bank of Chicago) |
| Abstract: | How costly is bad health and what makes good health valuable over the life cycle? Answering these questions requires carefully modeling health dynamics, including in the longer run, and a rich model of how health can affect households. We estimate a health shock process that allows for both history-dependence and ex-ante heterogeneity, and we introduce it in a rich life-cycle model that we estimate and that matches three sets of important facts: (i) The dynamics of health; (ii) The quantitative impact of bad health on labor earnings, medical spending, and life expectancy; (iii) The large disparity in accumulated wealth between the healthy and the unhealthy at retirement. We find that the costs of bad health among the working age population are steeply increasing in the number of years spent unhealthy and that the largest component of these costs is the loss in labor earnings. In contrast, the effect of out-of-pocket medical spending is relatively small. To also evaluate the non-pecuniary effects of health, we evaluate the willingness to pay to be healthy and we find that the most valuable aspect of being healthy is a longer life expectancy |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:533&r=age |
| By: | Teresa Ghilarducci; Joelle Saad-Lessler; Gayle Reznik (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | In the two years after the Great Recession of 2007Ð2009, 64 percent of workers at the top of the earnings distribution, compared to 56 percent of those at the bottom, experienced increases in defined contribution (DC) retirement wealth. We condition DC wealth accumulation on workersÕ position in the earnings distribution using a unique 2-year panel (2009-2011) from the Survey of Income and Program Participation (SIPP). Earnings losses of 10 percent or more in a personÕs career; non-employment spells; lower employer contributions; and having less diversified portfolios barely affect earners in the top 10 percent of the earnings distribution, but are associated with less DC wealth accumulation for those at the bottom. These differences may contribute to a growing retirement wealth gap. |
| Keywords: | Defined contribution pensions, retirement wealth inequality |
| JEL: | J32 J11 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2017-08&r=age |
| By: | Alexandre Georgieff (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Anthony Lepinteur (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper assesses the causal effect of partial employment protection on workers' subjective job security via the perceived probability of layoff. We consider the rise in the French Delalande tax, which is paid by private firms if they lay off older workers. This reform was restricted to large firms and therefore allows us to use a difference-indifference strategy. In ECHP data, we find that the change in the perceived probability of layoffs induced by the higher Delalande tax improved the subjective job security of older (protected) workers, but at the cost of a negative externality on younger (unprotected) workers. While the fall in perceived job security of younger workers is mirrored by actual increase in their layoff rate, the rise in perceived job security of older workers is more puzzling because we do not observe a reduction in their layoff rate. |
| Keywords: | Employment Protection,Perceived Job Security,Difference-in- Difference |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01519772&r=age |
| By: | Yoshinori Nakagawa (Department of Management, Kochi University of Technology); Kaechang Park (Research Organization for Regional Alliance, Kochi University of Technology); Hirotada Ueda (Kyoto Sangyo University); Hiroshi Ono (Honda Motor Co.,Ltd.) |
| Abstract: | In the aging information society, replacing human passengers' protective effects on vehicle drivers with those of social robots is essential. However, effects of social robots' presence on drivers have not yet been fully explored. Thus, using a driving simulator and a conversation robot, this experimental study aimed to answer two research questions: (i) whether social robots' anthropomorphic qualities per se—not practical information the robot provides drivers—have protective effects by promoting cautious driving and alleviating crash risks and (ii) in what psychological processes such effects emerge. Participants were collected from young, middle-aged, and elderly cohorts (n = 37, 36, and 36, respectively). They were allocated to either the treatment group (simulated driving in a conversation robot's presence) or the control group (simulated driving alone), and their driving performance was measured. Emotions (peace of mind, loneliness, and concentration) were also measured in a post-driving questionnaire survey using our original, psychometrically sound scales. Although the older cohort did not demonstrate protective effects, perhaps due to motion sickness, young and middle cohorts drove cautiously, with the robot enhancing either peace of mind or concentration. Protective effects were partly ascribed to the robot's role of expressing sympathy, especially when drivers encountered not-their-fault minor incidents and became stressed. This finding suggests a new driving-safety approach, in which the central point is passengers receiving drivers’ emotions, rather than giving them information or warnings, regardless of whether passengers are humans or social robots. |
| Keywords: | Passenger effects on drivers, Social Robots, eak AI stance |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2017-16&r=age |
| By: | Ayşe İmrohoroğlu (University of Southern California); Kai Zhao (University of Connecticut) |
| Abstract: | In this paper, we show that a general equilibrium model that properly captures the risks in old age, the role of family insurance, changes in demographics, and the productivity growth rate is capable of generating changes in the national saving rate in China that mimic the data well. Our findings suggest that the combination of the risks faced by the elderly and the deterioration of family insurance due to the one-child policy may account for approximately half of the increase in the saving rate between 1980 and 2010. Changes in the productivity growth rate account for the fluctuations in the saving rate during this period. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2017-17&r=age |
| By: | Böckerman, Petri (Labour Institute for Economic Research); Ilmakunnas, Pekka (Aalto University) |
| Abstract: | We analyze the potential role of adverse working conditions and management practices in the determination of employees' retirement behavior. Our data contain both comprehensive information regarding perceived job disamenities, job satisfaction, and intentions to retire from nationally representative cross-sectional surveys and information on employees' actual retirement decisions from longitudinal register data that can be linked to the surveys. Using a trivariate ordered probit model, we observe that job dissatisfaction arising from adverse working conditions is significantly related to intentions to retire, and this in turn is related to actual retirement during the follow-up period. |
| Keywords: | working conditions, job satisfaction, retirement, new management practices |
| JEL: | J26 J28 J53 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10964&r=age |
| By: | Ray C. Fair (Cowles Foundation, Yale University); Edward H. Kaplan (School of Management, Yale University) |
| Abstract: | This paper uses world running records by age to estimate a biological frontier of decline rates. Two models are compared: a linear/quadratic (LQ) model and a non-parametric model. Two estimation methods are used: 1) minimizing the squared difference between the observed records and the modeled biological frontier and 2) using extreme value theory to estimate the biological frontier that maximizes the probability of observing the existing world records by age. The results support the LQ model and suggest there is linear percentage decline up to the late 70’s and quadratic decline after that. The extreme value estimates suggest that the true biological frontier is on average about 8 percent below the existing world records. The estimated age factors are also compared to the World Master Athletics (WMA) age factors. The two sets of age factors are close except at the old ages, where the WMA factors are noticeably smaller. Also, the WMA age factors do not meet an important biological constraint. |
| Keywords: | Aging effects, Running events |
| JEL: | H19 J24 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:3000&r=age |
| By: | Nicole Maestas (Harvard University); Kathleen J. Mullen (RAND); David Powell (RAND); Jeffrey Wenger (RAND); Till von Wachter (University of California-Los Angeles) |
| Abstract: | In this report we highlight findings on the differing job demands of older versus younger workers from the 2015 American Working Conditions Survey (AWCS), a new nationally representative survey of U.S. workers ages 25-71. We find that generally older workers (over age 50) report better working conditions than younger workers, with some exceptions (e.g., on-the-job training, prospects for career advancement). |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp362&r=age |
| By: | Adam M. Lavecchia (Department of Economics, University of Ottawa, Ottawa, ON) |
| Abstract: | This paper studies the effect of raising contribution limits on retirement saving by exploiting the ‘catch-up limit’ provision, a rule which allows those over the age of 50 to make higher IRA and 401(k) contributions than those under 50. Using an age-related regression discontinuity design, I find that eligibility for ‘catch-up limits’ leads to a large increase in total tax-deferred contributions for those without access to a 401(k) plan. This is driven by a 25 percent increase in average IRA contributions and a 21 percent increase in the likelihood of making an IRA contribution. I also find no significant effects on overall 401(k) contributions. The findings suggest that, contrary to the neoclassical life-cycle model, the response to eligibility for ‘catchup limits’ was not limited to constrained savers. |
| Keywords: | Retirement saving, Tax-preferred savings accounts, Contribution limits, Regression discontinuity design |
| JEL: | D14 H31 J26 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ott:wpaper:1712e&r=age |