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on Economics of Ageing |
| By: | Willem Devriendt; Freddy Heylen (-) |
| Abstract: | Demographic change forces governments in all OECD countries to reform the public pension system. Increased sensitivity to rising inequality in society has made the challenge for policy makers only greater. In this paper we evaluate alternative reform scenarios. We employ an overlapping generations model for an open economy with endogenous hours worked, human and physical capital, output, and welfare. Within each generation we distinguish individuals with high, medium or low ability to build human capital. Frequently adopted reforms in many countries such as an increase of the normal retirement age or a reduction in the pension benefit replacement rate can guarantee the financial sustainability of the system, but they fail when the objective is also to improve macroeconomic performance and aggregate welfare without raising intergenerational or intragenerational welfare inequality. Our results prefer a reform which combines an increase of the retirement age with an intelligent design of the linkage between the pension benefit and earlier labour earnings. First, this design conditions pension benefits on past individual labour income, with a high weight on labour income earned when older and a low weight on labour income earned when young. Second, to avoid rising welfare inequality this linkage is complemented by a strong rise in the benefit replacement rate for low ability individuals (and a reduction for high ability individuals). |
| Keywords: | demographic change, population ageing, pension reform, retirement age, heterogeneous abilities, inequality, overlapping generations |
| JEL: | E6 H55 J22 J26 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:18/948&r=age |
| By: | Maria D. Fitzpatrick |
| Abstract: | For many people, working after beginning retirement benefit collection is a way to enhance financial security by increasing income. Existing research has shown that retirees are sensitive to the Social Security earnings test, which restricts the amount of earnings some beneficiaries can receive. However, little is known about the effects of other types of policies on post-retirement employment. Instead of restricting earnings, many public pension plans restrict the number of hours beneficiaries can work. I use return-to-work rules limiting the number of hours of employment in a state’s public pension plan and administrative data on employment and retirement to determine the rules’ effects on retirement decisions and post-retirement labor supply. I find that the increases in the maximum number of hours of post-retirement employment lead to no change in retirement benefit collection and to increases in part-time work among retirees. As such, these policies appear to be binding on the labor supply decisions of some employees. Policymakers should take this into account when designing policies aimed at extending work-lives or improving the health of pension systems. |
| JEL: | H55 J26 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25299&r=age |
| By: | Klaas de Vos; Arie Kapteyn; Adriaan Kalwij |
| Abstract: | There have been a vast number of social security reforms aimed at increasing employment at older ages over the last two decades in the Netherlands. These reforms mainly lead to more stringent eligibility criteria for, and reduced generosity of, social security programs. Our empirical evidence suggests that these reforms are likely to have contributed to individuals working longer, but it is difficult to pinpoint which reforms have been most effective. Furthermore, we show that the recent increase in the state pension eligibility age is likely to further increase employment at older ages. |
| JEL: | H55 J08 J26 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25250&r=age |
| By: | Shawn Ni (Department of Economics, University of Missouri-Columbia); Michael Podgursky (Department of Economics, University of Missouri-Columbia); Xiqian Wang (Department of Economics, University of Missouri-Columbia) |
| Abstract: | We analyze late-career teacher turnover induced by pension incentives. Using longitudinal data with performance measures for Tennessee public school teachers, we find higher quality teachers are less likely to retire conditional on age and experience. To quantify the effects of pension incentives, we estimate a structural model for retirement and find that high quality teachers have a lower disutility for teaching relative to retirement. We use the structural estimates to simulate the effect of changes in retirement incentives. Enhancements to traditional plans accelerate teacher retirement, whereas targeted retention bonuses delay retirement and retain high quality teachers at relatively modest cost. |
| Keywords: | Teacher Pensions, Teacher Quality, Teacher Retirement |
| JEL: | I21 J26 J38 |
| Date: | 2018–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1815&r=age |
| By: | Jiayi Wen (Xiamen University) |
| Abstract: | Under skill-biased technical change, jobs are becoming less physically demanding whereas require increasing cognitive abilities. However, existing research does not pay sufficient attention on the role of cognitive health in older people's labor supply, nor to the occupation-dependent labor supply effects of physical and cognitive health. This paper reveals several facts about the heterogeneity of physical and cognitive health, as well as their relationship with older people's labor supply across occupations. Based on these facts, this paper proposes and estimates a dynamic programming structural model of individual retirement and saving decisions. The model allows labor supply effects of physical and cognitive health to differ across occupations via four channels respectively: disutility of working, wage, medical expenditure and life expectancy . I estimate the model with the U.S. Health and Retirement Study data by Indirect Inference. The counterfactual experiments suggest cognitive health has little retirement effect for manual workers. However, for clerical workers, the effect is almost as large as the one of physical health. The counterfactual experiment also reveals the mechanisms through which physical and cognitive health affects labor supply respectively. Finally, this paper quantifies the distributional effects of proposed Social Security changes on retirement, benefits and welfare across occupations. |
| Keywords: | Cognition, Retirement, Social Security |
| Date: | 2018–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002390&r=age |
| By: | Ortiz, Isabel,; Durán-Valverde, Fabio.; Urban, Stefan.; Wodsak, Veronika.; Yu, Zhiming. |
| Abstract: | From 1981 to 2014, thirty countries privatized fully or partially their public mandatory pensions; as of 2018, eighteen countries have reversed the privatization. This report: (i) analyses the failure of mandatory private pensions to improve old-age income security and their underperformance in terms of coverage, benefits, administrative costs, transition costs, social and fiscal impacts, and others; (ii) documents the reversals of pension privatization, the laws, governance, new entitlements, financing and contribution rates of the new public pension systems; (iii) provides guidance on the key policy steps to reverse pension privatization, for those countries considering returning back to a public system. |
| Keywords: | pension scheme, social protection, Eastern Europe, Latin America |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005393302676&r=age |
| By: | Moshe A. Milevsky; Thomas S. Salisbury; Alexander Chigodaev |
| Abstract: | We use life annuity prices to extract information about human longevity using a framework that links the term structure of mortality and interest rates. We invert the model and perform nonlinear least squares to obtain implied longevity forecasts. Methodologically, we assume a Cox-Ingersoll-Ross (CIR) model for the underlying yield curve, and for mortality, a Gompertz-Makeham (GM) law that varies with the year of annuity purchase. Our main result is that over the last decade markets implied an improvement in longevity of of 6-7 weeks per year for males and 1-3 weeks for females. In the year 2004 market prices implied a $40.1\%$ probability of survival to the age 90 for a 75-year old male ($51.2\%$ for a female) annuitant. By the year 2013 the implied survival probability had increased to $46.1\%$ (and $53.1\%$). The corresponding implied life expectancy has increased (at the age of 75) from 13.09 years for males (15.08 years for females) to 14.28 years (and 15.61 years.) Although these values are implied directly from markets, they are consistent with demographic projections. Similar to implied volatility in option pricing, we believe that our implied survival probabilities (ISP) and implied life expectancy (ILE) are relevant for the financial management of assets post-retirement and very important for the optimal timing and allocation to annuities; procrastinators are swimming against an uncertain but rather strong longevity trend. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1811.09932&r=age |
| By: | Takashi Oshio; Akiko S. Oishi; Satoshi Shimizutani |
| Abstract: | We examine how the change in the trend of the elderly’s employment rates has been associated with changes in incentives of social security and its related programs in Japan since the 1980s. We compute the tax force to retire early, using the institutional parameters and synthetic earnings profiles, and juxtapose the tax force measures and the elderly employment rates during 1980 and 2016. Our results suggest that a reduction in the tax force to retire early due to a series of social security reforms has been associated with the recent recovery of the employment rates for men aged 60 years and over as well as the increasing upward trend in the employment rates for women aged 55-64 years. |
| JEL: | J14 J26 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25243&r=age |
| By: | Dan Constantinescu (Ecological University of Bucharest) |
| Abstract: | After many years in which the social problems have been treated as an attribute of each state’s internal politics, the beginning of the third millennium marks the onset of a concentrated effort to reform the social security systems in most of the world’s states. For pension systems, the greatest common challenge is the attenuation of the demographic pressure, whose effect – on medium and long period of time – consists in the depreciation of financial sustainability of public systems and in accentuating the discrepancy between the benefits received from the public system and retired workers necessary of financial resources. In the context of European Union’s state members, the legislation on the people’s liberty and mobility domain implies the creation of a social security basic (minimal) system, which also regards aspects of pension benefits extraterritoriality. Meanwhile, the free circulation of services principle generates new problems regarding state border supervision. The last economical-financial crisis proved that, although the diversity principle allows each state member to decide on the pension system most agreeable, a certain series of common guidelines cannot be eluded, like the ones regarding investment regulation, the risk-based approach of supervising or the coordination of tax systems. |
| Keywords: | population ageing, pension deficit, investment, regulations, replacement rates, minimum returns, supervision, crisis, risk management |
| JEL: | H55 H75 J32 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:eub:wpaper:2018-01&r=age |
| By: | Bertranou, Fabio; Casali, Pablo; Velasco, Juan Jacobo |
| Abstract: | This article discusses the future of social protection in Latin America and the challenges the region faces in the three key performance areas: coverage, sufficiency and sustainability. In particular, the article analyses how coverage is strongly determined by the structure of employment; the limits to expand it given the inability to generate sufficient fiscal space; the consequences of widespread economic and labour informality; the governance deficits; and the acceleration of population aging. It also discusses the increasing need of an adequate combination of contributory and non-contributory social protection provision, as well as the need for a better articulation of social protection systems with the sustainable development framework and its three main spheres: economic, social and environmental. Finally, it is addressed the future of social protection in a context of a growing employment in the services sector, technological change and automation of production and employment; and the relevance of an adequate social protection response to the consequences of climate change and the effects of natural disasters. |
| Keywords: | social protection, social security, employment, future of work, Latin America |
| JEL: | H55 J11 J14 J18 J26 J32 N36 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:90282&r=age |
| By: | Riphahn, Regina T. (University of Erlangen-Nuremberg); Schrader, Rebecca (University of Erlangen-Nuremberg) |
| Abstract: | We investigate whether a cut in unemployment benefit payout periods affected older workers' labor market transitions. We apply rich administrative data and exploit a difference-in-differences approach. We compare the reference group of 40-44 year olds with constant benefit payout periods to older treatment groups with reduced payout durations. For the latter job exit rates declined, job finding rates increased, the propensity to remain employed increased, and the propensity to remain unemployed declined after the reform. These patterns suggest that the reform of unemployment benefits may be one of the reasons behind the recent incredible rise in old age employment in Germany. |
| Keywords: | labor force participation, employment, unemployment insurance, retirement |
| JEL: | J14 J26 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11931&r=age |
| By: | Szikra, Dorottya. |
| Abstract: | This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Hungary. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, coverage, benefit adequacy, financing and contribution rates, governance and social security administration, social dialogue, positive impacts and other key issues of Hungary’s pension system. |
| Keywords: | pension scheme, social protection, Hungary |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005393002676&r=age |
| By: | Huaxiong Huang; Moshe A. Milevsky; Thomas S. Salisbury |
| Abstract: | We solve a lifecycle model in which the consumer's chronological age does not move in lockstep with calendar time. Instead, biological age increases at a stochastic non-linear rate in time like a broken clock that might occasionally move backwards. In other words, biological age could actually decline. Our paper is inspired by the growing body of medical literature that has identified biomarkers which indicate how people age at different rates. This offers better estimates of expected remaining lifetime and future mortality rates. It isn't farfetched to argue that in the not-too-distant future personal age will be more closely associated with biological vs. calendar age. Thus, after introducing our stochastic mortality model we derive optimal consumption rates in a classic Yaari (1965) framework adjusted to our proper clock time. In addition to the normative implications of having access to biological age, our positive objective is to partially explain the cross-sectional heterogeneity in retirement spending rates at any given chronological age. In sum, we argue that neither biological nor chronological age alone is a sufficient statistic for making economic decisions. Rather, both ages are required to behave rationally. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1811.09921&r=age |
| By: | Leah Achdut (The Ruppin academic Center) |
| Abstract: | Over the last decade, attention has been drawn to a joint income-wealth perspective on living standards. Wealth affects living standards in more diverse ways than current income: it not only may generate direct flows of income, but also may enable families to smooth out consumption by relying on savings, assets and loans and protect them in times of economic distress. The purpose of this paper is to examine income-wealth poverty trends during the decade 2005 -2015 among Israeli aged 50 and older, compared to those in European countries. The study applies two approaches for integrating income and wealth: The first approach integrates income and wealth into one single dimension by converting wealth into annuity, while the second approach applies a two-dimensional framework and specifies poverty threshold for each dimension separately. Wealth poverty, called also financial distress, is seen as a situation where asset holdings are insufficient to maintain the household at a minimally acceptable living standard for a given period. The study is based on data from SHARE-Israel, conducted as part of the SHARE project (Survey of Health, Aging and Retirement in Europe). SHARE is longitudinal survey on people aged 50 and older, and it includes detailed information on disposable income and on the value of the various components of real assets, financial assets and debts. We found that (a) the traditional income poverty rate was relatively stable and ranged from 21% to 24%. (b) poverty rates according to the unidimensional approach were quite similar to the traditional income poverty rates.(c) the proportion of families in financial distress was much lower: between 8.2% and 10.0%. In other words, the net wealth of about 8.2% -10.0% of all families was insufficient to maintain the household at the income poverty line for 3 months. Moreover, about 7% of the families had wealth less than three times of their current monthly income. (d) compared to European countries, Israel is located in the top third of the traditional income poverty scale, but in the bottom third of the financial distress scale. |
| Keywords: | Poverty, wealth, income, SHARE, Israel |
| JEL: | D31 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:6709990&r=age |
| By: | takashi nakamura (tokyo city university) |
| Abstract: | Japan has been facing problems related to decline of population and aging. Also Tokyo metropolitan area is estimated depopulation and hard aging. Additionally a new urban planning that targets the reduction of automobile dependence and the use of public transit is required for realization of sustainable city. Tokyo metropolitan area is originally excellent in railway usage on commuting transit. Under this situation it is important that railway passengers preserve. I study the influence of land use patterns, aging and traffic means to railway station around above 580 railway stations on railway passengers from the viewpoint of sustainable rail transit service, especially viewpoint of TOD (Transit Oriented Development) using multiple regression analysis. In this study I set railway station influence area 800m in land use analysis and 500m in population aging analysis. I use railway passenger?s data from 1999 to 2015. In this study land use classification is farmland, forest, low-rise housing, crowd low-rise housing, middle and high-rise housing, commercial and business use, park and green land, manufacturing, public institution and development land. Traffic means to railway station in this study analysis are bicycle, bus, motor bicycle and working. As a result, it?s found that aging around railway station affect decrease railway passengers and mixed land use around railway stations has a constant effect on the increase and retention of the number of railway passengers. On the other hand, traffic means to railway station is not related to maintenance of the railway user. In addition aging around railway station is related to land use. Namely, in high component of low-rise housing areas hard aging is advancing. I will introduce success example of railway passengers? maintenance. It is important to perform mixed land use around railway station, urban redevelopment around railway station at high component of low-rise housing area, especially, unplanned sprawl area. |
| Keywords: | TOD; land use pattern; passengers of railway station; mixed land use; population aging. traffic means to railway station, multiple regression analysis |
| JEL: | R58 R14 L92 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:7009185&r=age |
| By: | Maltseva, Elena.; Janenova, Saltanat. |
| Abstract: | This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Kazakhstan. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, coverage, benefit adequacy, financing and contribution rates, governance and social security administration, social dialogue, positive impacts and other key issues of Kazakhstan’s pension system. |
| Keywords: | pension scheme, social security reform, privatization, Kazakhstan |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005392902676&r=age |
| By: | Eduardo Díaz, Luis. |
| Abstract: | This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Venezuela. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, governance and social security administration, social dialogue, positive impacts and other key issues of the Venezuelan pension system. |
| Keywords: | pension scheme, social security administration, Venezuela |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005392502676&r=age |
| By: | Mesa-Lago, Carmelo, |
| Abstract: | This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Bolivia. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, coverage, benefit adequacy, financing and contribution rates, governance and social security administration, social dialogue, positive impacts and other key issues of Bolivia’s pension system. |
| Keywords: | pension scheme, social protection, Bolivia |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005393202676&r=age |
| By: | Navarro, Karlos. |
| Abstract: | This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Nicaragua. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, governance and social security administration, social dialogue, positive impacts and other key issues of the Nicaraguan pension system. |
| Keywords: | pension scheme, social security administration, Nicaragua |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005392602676&r=age |
| By: | Bertranou, Fabio.; Cetrángolo, Oscar.; Grushka, Carlos.; Casanova, Luis. |
| Abstract: | This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Argentina. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, coverage, benefit adequacy, financing and contribution rates, governance and socialsecurity administration, social dialogue, positive impacts and other key issues of Argentina’s pension system. |
| Keywords: | pension scheme, social protection, Argentina |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005393102676&r=age |
| By: | Polakowski, Michał.; Hagemejer, Krzysztof. |
| Abstract: | This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Poland. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, coverage, benefit adequacy, financing and contribution rates, governance and social security administration, social dialogue, positive impacts and other key issues of Poland’s pension system. |
| Keywords: | pension scheme, social protection, Poland |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005392802676&r=age |
| By: | Peña-Jarrín, Francisco. |
| Abstract: | "This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Ecuador. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, coverage, benefit adequacy, financing and contribution rates, governance and social security administration, social dialogue, positive impacts and other key issues of Ecuador’s pension system." -- Ack. |
| Keywords: | pension scheme, social protection, Ecuador |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005392702676&r=age |
| By: | Fultz, Elaine.; Hirose, Kenichi. |
| Abstract: | Most analyses of Central and Eastern Europe’s (CEE) second-pension pillars focus on Hungary and Poland, the first CEE governments to establish such pillars (1997-1999) and the first to retrench them (2010-2011). However, as the regional front-runners in second-pillar creation and termination, Hungary and Poland differ in some important ways from other CEE countries that adopted this model. This paper concentrates on the other CEE second pillars, a majority of which have matured and begun to pay benefits, although only to small numbers of workers. For seven CEE countries, it describes these private benefits, compares them with public pensions and presents available evidence concerning their durability, adequacy and financing. |
| Keywords: | pension scheme, Bulgaria, Croatia, Latvia, Macedonia, Romania, Slovakia |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005392402676&r=age |