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on Economics of Ageing |
| By: | Christian Geppert; Yvan Guillemette; Hermes Morgavi; David Turner |
| Abstract: | A decomposition of changes to participation rates of 55-to-74 year-olds between 2002 and 2017 based on an estimated equation attributes more than two thirds of the median increase (of 10.9 percentage points) to rising life expectancy and educational attainment. About 1 percentage point is attributable to changes in statutory retirement ages, although part of the reason these effects are not larger is that in most countries, statutory retirement ages have not kept pace with life expectancy. Although difficult to incorporate in the empirical framework, evidence of falling disability pension rolls and reduced sensitivity of old-age participation to the level of unemployment suggests that the tightening of alternative early retirement pathways through unemployment or disability schemes has been a major factor in the turnaround in the participation rate of older workers. Projections indicate that participation rates for 55-to-74 year-olds should keep rising through 2030, by 3.4 percentage points for the median country. Rising life expectancy and educational attainment are projected to make the largest contributions, more than compensating for the negative contribution of population ageing in most countries. |
| Keywords: | labour supply, older workers, Participation, statutory retirement ages |
| JEL: | J21 J26 |
| Date: | 2019–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1554-en&r=all |
| By: | Damiaan Chen; Sweder van Wijnbergen |
| Abstract: | In a pension system with uniform policies for contribution and accrual, each participant has the same contribution rate and accrual rate independent of the age at the time of payment. Although a common practice for public sector pension plans in many countries, this is not actuarially fair because the investment horizon of young participants is longer than the investment horizon of the elderly. We show the unintended redistributive intergenerational effects of a uniform contribution system and the consequences of switching from uniform policies to an actuarially fair system, first analytically in a stylized model with three overlapping generations. We then quantify these effects in a detailed model with multiple overlapping generations, realistic parameters and detailed information on the income distribution, calibrated on the Dutch funded pension system. The system implies a substantial transfer of income from poor to wealthy participants of about 10 billion euros. The gross aggregate transition effect of abolishing the uniform policy pension for an actuarially fair system is about 37 billion euros (5% of the Dutch GDP). For each cohort, the redistributive effects are less than 5% of their total pension. |
| Keywords: | uniform policies; pension funds; transition; income inequality |
| JEL: | G23 J32 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:641&r=all |
| By: | Jakub Sawulski; Iga Magda; Piotr Lewandowski |
| Abstract: | How will the rapid ageing of the population affect pension expenditure in Poland? Jakub Sawulski, Iga Magda and Piotr Lewandowski show that pension expenditure will remain at a level similar to now until 2060. The most important factor preventing an increase in pension expenditure will be a drop in the level of pension benefits. The average replacement rate (the ratio between a person’s first pension and their last salary) will fall by more than double in Poland, which will be the largest fall among all EU countries. |
| Keywords: | pension system, pensions, public finance |
| JEL: | H50 H55 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:ppaper:pp022019&r=all |
| By: | Lee, Hyun-Hoon; Shin, Kwanho |
| Abstract: | Using panel data for 142 countries for the period from 1960 to 2014, we assess the effects of population aging on economic growth. We find that population aging proxied by old-age population share (or old-age dependency ratio) negatively affects economic growth only when it reaches a certain high level and its negative effects grow stronger as population aging deepens. We also find that population aging has hampered economic growth during more recent years, especially in more aged countries which are mostly developed countries. This nonlinear effect of aging is mainly driven by the fact that we use old-age population share as a proxy for aging. If we use lower working-age population share as a proxy for aging, the nonlinear relationship disappears: working-age population share is positively related to economic growth in a linear way. |
| Keywords: | population aging, working-age population, economic growth, nonlinearity, developed countries |
| JEL: | J11 O47 O57 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-86&r=all |
| By: | KITAO Sagiri; MIKOSHIBA Minamo; TAKEUCHI Hikaru |
| Abstract: | The speed and magnitude of the ongoing demographic aging in Japan are unprecedented. A rapid decline in the labor force and a rising fiscal burden to finance social security expenditures could hamper growth over a prolonged period. We build a dynamic general equilibrium model populated by overlapping generations of males and females who differ in employment type and labor productivity in addition to life expectancy. We study how changes in the labor market over the coming decades will affect the transition path of the economy and fiscal situation of Japan. We find that a rise in the labor supply of females and the elderly of both genders in extensive margin and in productivity can significantly mitigate the effects of demographic aging on the macroeconomy and reduce fiscal pressures, despite a decline in wages during the transition. We also quantify effects of alternative demographic scenarios and fiscal policies. The study suggests that a combination of policies that remove obstacles hindering the labor supply and that create a more efficient allocation of male and female workers of all age groups will be critical to keeping government deficits under control and raising incomes across the nation. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19039&r=all |
| By: | Yukihiro Nishimura (Graduate School of Economics, Osaka University); Pierre Pestieau (CREPP, Universite de Li`ege, CORE) |
| Abstract: | We consider a society where individuals differ according to their productivity and their risk of mortality and dependency. We show that ac-cording to the most reasonable estimates of correlations among these threecharacteristics, if one had to choose between a public pension system anda long-term care social insurance, the latter should be chosen by a utili-tarian social planner. With a Rawlsian planner, the balance between thetwo schemes does depend on the comparison between the probabilities ofthe worst off individual and the probabilities of the rest of society. |
| Keywords: | long term care, pension, mortality risk, optimal taxation,liquidity constraints |
| JEL: | H2 H5 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1903&r=all |
| By: | Teresa Ghilarducci; Siavash Radpour; Anthony Webb (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Using Health and Retirement Study data linked to summary plan descriptions and W-2s, this study reports trends in retirement wealth inequality of older employees 1992-2010. The study identifies and corrects methodological flaws in past research. Retirement wealth is highly unequally distributed; the top lifetime earnings quintile holds half of all retirement wealth, the bottom quintile, only 1 percent. The top earnings quintile fared better in 2010 than in 1992, whereas bottom-quintile earners fared worse. But retirement wealth inequality mainly reflects inequality within earnings quintiles, resulting from inadequate savings, not outsize accumulations. Systemic flaws reduce median retirement wealth by 84 percent. |
| Keywords: | retirement, wealth, inequality |
| JEL: | J26 J32 J11 D63 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2019-01&r=all |
| By: | Jong-Suk Han; Jong-Wha Lee |
| Abstract: | In this study, we construct a measure of human capital using micro datasets on labor composition of age, gender, education, and wage rate and analyze its role in economic growth for the Korean economy. Over the past three decades, human capital has grown steadily at about 1% per year, contrasting to a continuously declining trend of total work-hours. This growth has been driven by the rise of better-educated baby boom cohorts. A growth accounting exercise shows that human capital contributes significantly to economic growth; it accounted for 0.5% points of annual GDP growth over the period. Human capital is projected to remain a major growth factor over the next two decades as the increase in educational attainment continues. Increased employment rate of elderly or female workers reduces the aggregate human capital growth while increasing the available labor. Polices to improve human capital of less-productivity workers will help to support aggregate human capital and economic growth. |
| Keywords: | Aging, Demographic change, Education, Human capital, Growth, Training |
| JEL: | I25 J24 O47 O53 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2019-39&r=all |
| By: | Teresa Ghilarducci; Siavash Radpour; Anthony Webb (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Using data from the Survey for Income and Program Participation (SIPP), this study investigates the relationship between withdrawals from 401(k) and IRA accounts and household level economic shocks such as job-loss, job change, divorce, and the onset of poor health. Workers in low-wage households are more likely to withdraw from their accounts than those in middle and high income households, in part because they experience more shocks, and are more likely to withdraw, conditional on experiencing a shock. The above shocks are associated with about a fifth of all retirement account withdrawals and exacerbate pre-existing inequalities in financial preparation for retirement. |
| Keywords: | retirement savings, retirement, retirement wealth, economic shocks |
| JEL: | J26 J32 J11 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2018-03&r=all |
| By: | KITAO Sagiri; YAMADA Tomoaki |
| Abstract: | Inequality has become a central policy issue around the world. We study trends of inequality in earnings, income and wealth across households in Japan, using the National Survey of Family Income and Expenditure (NSFIE) from 1984 to 2014. We focus on the transition of inequality unconditionally and conditionally across various dimensions of household heterogeneity such as age, cohort, employment and marital status of household heads, sources of income, family size, etc. Inequality in earnings, income and wealth all increased during the last three decades. Changes in earnings and income inequality were mostly driven by demographic shift in the population towards the elderly, who tend to have higher inequality. Wealth inequality rose not only in the aggregate but also among the young, and this is due to a major increase in the fraction of households who own zero or very low wealth across all age groups. Critical factors in understanding inequality trends in Japan that we identified are aging demographics, changes in typical household structure, and macroeconomic trends of the past decades including the financial bubble period and a decades-long slow-down thereafter. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19034&r=all |
| By: | Alok Kumar (Department of Economics, University of Victoria) |
| Abstract: | This paper studies the interaction between investment by parents in the human capital of their children and income support received by parents from them in their old age (reverse transfers). I find that reversetransfers lead to an inefficiently high level of human capital investment, when children choose reverse transfers non-cooperatively. The choice of human capital investment imposes a positive externality on parents. An increase in the human capital investment of a child not only increases transfers from him/her to parents, but also increases transfers from the other child. When children cooperate, this externality is internalized leading to efficient level of human capital investment. Old-age pension scheme financed by taxes on children can lead to efficient level of human capital investment by parents. |
| Keywords: | Human Capital Investment, Old-Age Income Support, Multiple Children, Positive Externality, Rotten-Kid Theorem, Samaritan’s Dilemma |
| Date: | 2019–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:vic:vicddp:1902&r=all |
| By: | NAWATA Kazumitsu; MORINO Yuki; KIMURA Moriyo |
| Abstract: | In Japan, medical expenditures have been increasing rapidly and exceeded 42 trillion yen in fiscal year 2015. It is expected that medical expenditures will continue to increase due to aging population and expenses related to advancements of medical technologies. In order to handle this situation, the efficient use of medical resources is absolutely necessary. To achieve this goal, we need to observe the health conditions of all Japanese residents including not only sick individuals but also healthy ones on a long-term basis. In general, due to the fact that healthy individuals do not go to hospitals or clinics voluntarily, it is usually difficult to learn about their health status. To remedy this, special surveys that involve massive research funding efforts have been conducted in various countries. The numbers of surveyed individuals were at most tens of thousands and survived items were limited. In Japan, most workers 40 or older are required to undergo medical checkups once a year regardless of the patient's concern for their health, in accordance with the Industrial Safety and Health Act, and therefore a huge dataset of tens of millions of Japanese individuals exists; which is a much larger sample than studied in previous surveys. In this paper, we used the power transformation Tobit Model to analyze the database for medical expenditures by combining health checks and receipts for a total of 15580 cases. Especially, we used four different models (Model A-D) to analyze the effects of four major lifestyle-related diseases（diabetes, hypertension, dyslipidemia and hyperuricemia）on medical expenditures. For general covariates other than the four lifestyle-related diseases, we found that coefficients of age, anamnesis, objective symptoms, cardiovascular diseases, kidney failure/dialysis, weight change within the previous year and night-time snacking were positive and significant at the 1% level in all models. Coefficients of gender, systolic blood pressure (SBP), LDL cholesterol, smoking, walking and not eating breakfast more than 3 times per week became negative and significant at the 1% level. Coefficients of BMI, GOT value, and willingness to consult with health professionals became positive and significant at the 5% level. For SBP and LDL cholesterol, we obtained results that were opposite to previous findings. Concerning lifestyle-related diseases, medical expenditures became higher in most models, as expected. We also observed that medical expenditures became higher if an individual was taking medications for these diseases. In the case of diabetes, medical expenditures became higher than the cases of the other three lifestyle-related diseases. Furthermore, medical expenditures became much higher when these individuals had cerebrovascular, cardiovascular diseases and kidney failure/dialysis. Especially in cases where individuals had more than one life-style related disease, including diabetes and kidney failure/dialysis, medical expenses soared; average medical expenses exceeded 100,000 points and 13.6 times as much as that of a healthy individual. For the efficient use of medical resources, it is very important to prevent life-style related diseases though proper health counseling.. Early treatments are also important to prevent an individual from suffering from more serious stages of diseases. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:19025&r=all |
| By: | Teresa Ghilarducci; Aida Farmand (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | The bargaining power of workers cannot be measured directly, but it can be inferred from working conditions and institutional factors. This study documents the stagnation in older workers’ wages and the seven reasons older workers have lost bargaining power. Five factors relate to monopsony exposure from eroding retirement income security, union loss, more insecure employment relationships, persistent age discrimination, and geographical immobility. Two additional factors -- older workers' ineligibility for the Earned Income Tax Credit (EITC); and older workers’ relative propensity to work for smaller firms – also weaken bargaining power. Significant loss of bargaining power of workers over age 55 who are projected to fill 6.4 million of the 11.4 million net new jobs created between 2016 and 2026 could suppress wages and working conditions for all workers. |
| Keywords: | working conditions, wages, bargaining power, |
| JEL: | J50 J58 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2019-02&r=all |
| By: | Takayama, Noriyuki |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cisdps:679&r=all |
| By: | Takayama, Noriyuki |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cisdps:678&r=all |
| By: | Alok Kumar (Department of Economics, University of Victoria) |
| Abstract: | Old-age income support is an important motive for parents to invest in schooling of their children in developing countries. At the time parents choose schooling investment for their children, both parental future income and return from schooling are uncertain. This paper analyzes effects of parental income risk and human capital investment risk on parental schooling investment using alternative models (altruism and educational loan model) of determination of old-age income support in a model with intergenerational transfers. It finds that effects of these risks on schooling investment depend on whether old-age income support is state-contingent. When income support is state-contingent, increasing parental income risk (human capital investment risk) has a positive (negative) effect on schooling investment. However, when income support is not state-contingent, effects of these two types of risks may get reversed. Numerical analysis using Indonesian data suggests that risks have significant negative effect on schooling investment. |
| Keywords: | Schooling, Parental Income Risk, Human Capital Investment Risk, Old-Age Income Support, Risk-Sharing |
| Date: | 2019–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:vic:vicddp:1903&r=all |