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on Economics of Ageing |
| By: | Xuejin Zuo; Xiujian Peng; Xin Yang; Philip Adams; Meifeng Wang |
| Abstract: | China's population is rapidly ageing because of the sustained low fertility and increasing life expectancy. At the end of 2019, the elderly 65 and older accounted for 12.6 percent of the total population, compared to around seven percent in 2000. It will continue to increase to 31 percent in 2050. Rapid ageing imposes a big challenge to sustainable growth. The Chinese government is considering increasing the retirement age as a remedy to the challenge of population ageing. Using a dynamic general equilibrium model of the Chinese economy, this paper explores the implications of raising the retirement age on economic growth and pension sustainability in China over the period of 2020 to 2100. In the baseline scenario, we assume that China maintains its current retirement age. The simulation results reveal that growth in the labour force would turn negative because of population ageing. Thus China has to rely on technology improvement and capital stock increases to support its economic growth. Without reforming the current pension system, China's pension account will accumulate huge debts. The debt plus the interest obligation will put high pressure on the general government budget. By the end of this century, the general government budget deficit will reach to 22 percent of GDP. In the policy scenario, we assume that China will gradually increase the retirement age from 58 to 65 years old starting from 2020. The simulation results show that increasing the retirement age is a powerful policy in the short to medium term. It will boost China's economic growth and reduce the pension fund deficit significantly because it will not only increase the labour force but also reduce the number of pensioners by delaying them access to the pension fund. However, the effectiveness of the policy depends on how much the labour force participation rate for people aged 58 to 65 can be increased. |
| Keywords: | Population ageing, retirement age, labour force participation, pension, economic growth, CGE model |
| JEL: | J11 J26 C68 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cop:wpaper:g-303&r=all |
| By: | Reher, David S.; Requena, Miguel; de Santis, Gustavo; Esteve, Albert; Bacci, Massimo Livi; Padyab, Mojgan; Sandström, Glenn |
| Abstract: | Since death rates from the COVID-19 are highest among the oldest, the impact of the current pandemic in a given society depends to a large extent on the share of elderly persons and their living arrangements. Whereas the former is well known, the latter is not. Arguably, contagion itself and the severity of its symptoms are likely to vary among elderly persons living alone, co-residing with family members or dwelling in institutions. Arguments in favour and against the premise that single-living elderly are better able to self-isolate can be made. Long-term care facilities have worsened the effects of the epidemic because they have often become death traps in some but not all countries. Once contagion takes place, living arrangements can make a huge difference in the way the disease can be managed by the individual, his family and society. Properly understanding the dynamics of contagion and the handling of the disease in terms of living arrangements of elderly people is essential for effectively tackling future outbreaks of similar epidemics. |
| Date: | 2020–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:bfvxt&r=all |
| By: | Albertini, Marco; Sage, Lucas; Scherer, Stefani |
| Abstract: | Many scientists are currently contributing research on SARS-CoV2, with social scientists focusing on demographic and behavioral aspects when it comes to the diffusion of the virus. Recent publications include valid contributions about the importance of population’s demographic composition to understand country-differences in fatalities, and some speculations about the origins of different pace and patterns of diffusion. Among them the idea that intergenerational contacts would contribute to explain the fast spread and high fatality among the elderly population in some countries. We argument that in order to contribute to the scientific knowledge speculation is not enough and acknowledge that in the absence of solid, comparable data it is difficult to bring these ideas to an empirical test. Further, we present a simulation experiment shedding serious doubts on the importance of intergenerational contacts to spread the virus on the elderly population but underlining, instead, the importance of the high connectedness within the elderly population. That southern Europeans are not bowling alone seems to be more relevant to explain high diffusion among elderly than their contact to their (grand-)children. |
| Date: | 2020–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:exym8&r=all |
| By: | Bartels, Charlotte (DIW Berlin); Neumann, Dirk (Bundesministerium für Wirtschaft und Energie) |
| Abstract: | Redistribution across individuals in a one-year-period framework is an empirically intensely studied question. However, a substantial share of annual redistribution might turn out to serve individual insurance in a longer perspective, reducing the level of actual redistribution across individuals. This paper investigates to what extent long-run redistribution diverges from annual redistribution in welfare states of different types. Exploiting panel data from the Cross-National Equivalent File (CNEF) for Australia, Germany, South Korea, Switzerland, the United Kingdom, and the United States, we find that welfare states like Germany that are assumed to engage in a high level of redistribution actually achieve relatively less redistribution between individuals in the long run than the United Kingdom or the United States. Regression results show that a higher share of elderly in a country is associated with more annual redistribution, but with less long-run redistribution between individuals. The results suggest that, in welfare states with aging populations, we might expect growing annual redistribution that, to a substantial extent, is in fact income smoothing for the elderly. |
| Keywords: | welfare states, redistribution, insurance |
| JEL: | D31 D63 H53 H55 I38 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13675&r=all |
| By: | Martin Spielauer (WIFO); Thomas Horvath; Marian Fink |
| Abstract: | This paper introduces the microWELT model. Starting from its objectives, we discuss design choices, the model architecture and key features. microWELT provides a demographic projection tool reproducing Eurostat population projections but adding details such as education, intergenerational transmission of education, fertility by education, partnership patterns, and mortality differentials by education. The model integrates transfer flows as captured by the National Transfer Account (NTA) and National Time Transfer Account (NTTA) accounting framework and calculates a set of indicators based on NTA literature. Individual accounts allow the study of transfers over the whole life cycle by cohorts and between generations. |
| Keywords: | Microsimulation, Welfare State, Demographic Change, National Transfer Accounts |
| Date: | 2020–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2020:i:609&r=all |
| By: | Sanz-de-Galdeano, Anna (Universidad de Alicante); Terskaya, Anastasia (University of Navarra); Upegui, Angie (Universidad de Alicante) |
| Abstract: | We use data from the The National Longitudinal Study of Adolescent to Adult Health and from the Health and Retirement Study to explore how the the effect of individuals' genetic predisposition to higher BMI —measured by BMI polygenic scores— changes over the life-cycle for several cohorts. We find that the effect of BMI polygenic scores on BMI increases significantly as teenagers transition into adulthood (using the Add Health cohort, born 1974-83). However, this is not the case for individuals aged 55+ who were born in earlier HRS cohorts (1931-53), whose life-cycle pattern of genetic influence on BMI is remarkably stable as they move into old-age. |
| Keywords: | obesity, BMI polygenic scores, Add Health, Health and Retirement Study |
| JEL: | I1 I14 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13671&r=all |
| By: | Michael Greenstone (University of Chicago and NBER); Vishan Nigam (University of Chicago) |
| Abstract: | This paper develops and implements a method to monetize the impact of moderate social distancing on deaths from OVID-19. Using the Ferguson et al. (2020) simulation model of COVID-19Õs spread and mortality impacts in the United States, we project that 3-4 months of moderate distancing beginning in late March 2020 Would save 1.7 million lives by October 1. Of the lives saved,630,000 are due to avoided overwhelming of hospital intensive care units. Using the projected age-specific reductions in death and age-varying estimates of the United States GovernmentÕs value of a statistical life, we find that the mortality benefits of social distancing are about $8 trillion or $60,000 per US household. Roughly 90% of the monetized benefits are projected to accrue to people age 50 or older. Overall, the analysis suggests that social distancing initiatives and policies in response to the COVID-19 epidemic have substantial economic benefits. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-26&r=all |
| By: | Mathias Kronlund; Veronika K. Pool; Clemens Sialm; Irina Stefanescu |
| Abstract: | We examine the effects of a 2012 regulatory reform that mandated fee and performance disclosures for the investment options in 401(k) plans. We show that participants became significantly more attentive to expense ratios and short-term performance after the reform. The disclosure effects are stronger among plans with large average contributions per participant and weaker for plans with many investment options. Additionally, these results are not driven by secular changes in investor behavior or sponsor-initiated changes to the investment menus. Our findings suggest that providing salient fee and performance information can mitigate participants' inertia in retirement plans. |
| Keywords: | 401(k) plans; Disclosure; Expense ratio; Financial regulation; Mutual funds; Pensions; Performance |
| JEL: | G11 G23 G28 H55 |
| Date: | 2020–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2020-78&r=all |
| By: | Uchida, Yuki; Ono, Tetsuo |
| Abstract: | This study presents a political economy model with overlapping generations to analyze the effects of population aging on fiscal policy formation and the resulting distribution of fiscal burden across generations. The analysis shows that increased political power of the old, arising from population aging, leads to (i) an increase in the ratio of labor income tax revenue to GDP and the ratio of debt to GDP, and (ii) an increase in the ratio of capital income tax revenue to GDP in countries with high degrees of preferences for public goods, but an initial decrease followed by an increase in this ratio in countries with low degrees of preferences for public goods. |
| Keywords: | Generational burden; Overlapping generations; Political economy; Population aging; Public debt |
| JEL: | D70 E24 E62 H60 |
| Date: | 2020–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102826&r=all |
| By: | Leonardo Villar |
| Abstract: | Capítulo 11 del libro: Fedesarrollo: 50 años de influencia en política pública. Bogotá: Fedesarrollo - Leonardo Villar recoge y revisa las contribuciones que ha hecho Fedesarrollo en temas del mercado laboral, la informalidad y el sistema pensional a lo largo de las décadas. Adicionalmente, incluye algunas propuestas de reforma al sistema de protección económica para la vejez. |
| Keywords: | Mercado Laboral, Informalidad Laboral, Protección Económica a la Vejez, Pensiones de Jubilación, Sistema Pensional, Política Pública, Centros de Pensamiento, Fedesarrollo, Colombia |
| JEL: | J40 J46 H55 H75 J32 J48 L38 L31 I23 |
| Date: | 2020–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:col:000516:018371&r=all |
| By: | Aparicio Fenoll, Ainoa; Grossbard, Shoshana (San Diego State University) |
| Abstract: | The COVID crisis has severely hit both the United States and the European Union. Even though they are the wealthiest regions in the world, they differ substantially in economic performance, demographic characteristics, type of government, health systems, and measures undertaken to counteract COVID. We construct comparable measures of the incidence of the COVID crisis and find that US states had more COVID-related deaths than EU countries. When taking account of demographic, economic, and political factors (but not health-policy related factors) we find that fatalities at 100 days since onset are 1.3 % higher in a US state than in an EU country. The US/EU gap disappears when we take account of health-policy related factors. Differences in number of beds per capita, number of tests, and early lockdown measures help explain the higher impact of COVID on US fatalities measured either 50 or 100 days after the epidemic started in a nation/state. |
| Keywords: | COVID-19, mortality, Europe, US, health policy |
| JEL: | I18 J1 J18 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13683&r=all |
| By: | Chen, Lijun; House, Lisa A. |
| Keywords: | Food Consumption/Nutrition/Food Safety, Marketing, Institutional and Behavioral Economics |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea20:304453&r=all |
| By: | Johnsen, Julian Vedeler (Center for Applied Research); Willén, Alexander (Dept. of Economics, Norwegian School of Economics and Business Administration); Vaage, Kjell (University of Bergen) |
| Abstract: | Anticipating the labor market effects of welfare reforms is difficult due to public policy interactions across programs and among household members. Specifically, changes to one program may affect individual take-up of other programs, and individual participation in specific programs may generate labor market responses from other household members. This paper exploits an early retirement reform in Norway to provide new insights into these interactions. We first show that the reform had a substantial impact on the labor supply of those individuals who were directly affected by the reform, reducing the probability of employment by more than 30 percent. We then demonstrate that the increased take-up of early retirement had an offsetting effect on the take-up of alternative social security programs. Next, we reveal that the reform had a negative indirect impact on the labor supply of spouses of individuals directly affected by the reform, with an effect size of 5.5 percent. Finally, we show that the indirect effect on spousal labor force participation is accompanied by a significant increase in spousal take-up of disability insurance. We conclude that neglecting how public policies interact across both programs and household members can result in a miscalculation of the total impact of welfare reforms. |
| Keywords: | Public Policy; Welfare Reform; Early Retirement |
| JEL: | H55 J14 J18 J26 |
| Date: | 2020–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2020_020&r=all |