nep-age New Economics Papers
on Economics of Ageing
Issue of 2021‒08‒30
ten papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Retirement and Voluntary Work Provision: Evidence from the Australian Age Pension Reform By Zhu, Rong
  2. The 15-Hour Week: Keynes’s Prediction Revisited By Crafts, Nicholas
  3. Demographics, Wealth, and Global Imbalances in the Twenty-First Century By Adrien Auclert; Hannes Malmberg; Frederic Martenet; Matthew Rognlie
  4. Financial Structure and Growth of Pension Funds in Kenya By OMOLLO, HAROLD; OLWENY, TOBIAS; OLUOCH, OLUOCH; WAMATANDA, JOSHUA
  5. Reaching for yield or resiliency? Explaining the shift in Canadian pension plan portfolios By Sébastien Betermier; Nicholas Byrne; Jean-Sébastien Fontaine; Hayden Ford; Jason Ho; Chelsea Mitchell
  6. Sensitivity of Optimal Retirement Problem to Liquidity Constraints By Guodong Ding; Daniele Marazzina
  7. Ageing and Welfare-State Policy Making: Macroeconomic Perspective By Assaf Razin; Alexander Horst Schwemmer
  8. Funding Our Future By Douglas, Roger
  9. Financial Theories on Pension Fund Portfolios in Kenya By OMOLLO, HAROLD; OLWENY, TOBIAS; OLUOCH, OLUOCH; WAMATANDA, JOSHUA
  10. Food Insecurity and Food Production Activities of Older Households By Berning, Joshua P.; Bayham, Jude; Bonanno, Alessandro; Cleary, Rebecca; Baishya, Pratiksha

  1. By: Zhu, Rong (Flinders University)
    Abstract: This paper examines the empirical link between retirement and the supply of volunteer labor, using panel data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. To identify the causal impact, we exploit a major reform of the Australian Age Pension which has significantly changed the retirement incentives of older people. We find positive and significant effects of retirement status on the voluntary work provision of older men and women. Longer time spent in retirement increases the unpaid labor supply of women, while there is no such evidence for men. We further find evidence of intra-household retirement externalities: older people's retirement impacts positively on the volunteer behavior of their family members. Our findings suggest that the Australian Age Pension reform aiming at working life prolongation has led to an unintended shrinkage of the volunteer workforce.
    Keywords: retirement status, retirement duration, voluntary work, pension reform
    JEL: H55 J22 J26
    Date: 2021–08
  2. By: Crafts, Nicholas (University of Sussex and CAGE, University of Warwick)
    Abstract: In 1930 Keynes opined that by 2030 people would work only 15 hours per week. As such, this prediction will not be realised. However, expected lifetime hours of leisure and non-market work in the UK rose by 60 per cent between 1931 and 2011, considerably more than Keynes would have expected. This reflects increases in life expectancy at older ages and much longer expected periods of retirement. Leisure in retirement contributes to high life satisfaction for the elderly but building up savings to pay for it is a barrier to working only 15 hours per week.
    Keywords: Leisure: Life Expectancy; Retirement; Work JEL Classification: J22; J26; N34
    Date: 2021
  3. By: Adrien Auclert; Hannes Malmberg; Frederic Martenet; Matthew Rognlie
    Abstract: We use a sufficient statistic approach to quantify the general equilibrium effects of population aging on wealth accumulation, expected asset returns, and global imbalances. Combining population forecasts with household survey data from 25 countries, we measure the compositional effect of aging: how a changing age distribution affects wealth-to-GDP, holding the age profiles of assets and labor income fixed. In a baseline overlapping generations model this statistic, in conjunction with cross-sectional information and two standard macro parameters, pins down general equilibrium outcomes. Since the compositional effect is positive, large, and heterogeneous across countries, our model predicts that population aging will increase wealth-to- GDP ratios, lower asset returns, and widen global imbalances through the twenty-first century. These conclusions extend to a richer model in which bequests, individual savings, and the tax-and-transfer system all respond to demographic change.
    JEL: E21 F21 J11
    Date: 2021–08
    Abstract: Financial structure choice and its impact on growth remains a great dilemma to all stakeholders. Whereas several studies have been done on this subject, more is yet to be established so as to ascertain the validity of the relationship between the financial structure and growth while factoring in an appropriate moderating variable like firm size in Kenya. The study investigates the confluence of financial structure and growth of pension funds management organizations in Kenya while considering confounding studies supporting, disagreeing and undecided views of other scholars. This study highlighted several empirical evidences, literature review, objectives and the research hypotheses. The study employed causal research design with secondary panel data from the financial statements of 49 pension firm organizations carefully identified according to Krejcie and Morgan (1970) table retrieved from a population of 68 registered pension scheme managers in Kenya as at December 31st 2018. Data was retrieved from the retirement benefit authority records for the period December 2009-2018.Model specifications linking both the Independent, dependent and the error term was applied together with statistical and diagnostic tests. The effect of financial structure on pension funds is not significant across all firms. It is also concluded that highly geared firms have significant relationship with equity returns and insignificant relationship with asset returns. In addition, highly geared firms tend to have high profitability and that the nature of the industry also determines the effect of financial structure on their growth.
    Keywords: Capital Structure, Financial Performance, Financial Structure, Speed of Adjustment Working Capital Management, Short Term Debt, Long Term Debts, External Equity Internal Equity
    JEL: G3
    Date: 2021–07–08
  5. By: Sébastien Betermier; Nicholas Byrne; Jean-Sébastien Fontaine; Hayden Ford; Jason Ho; Chelsea Mitchell
    Abstract: “Reach for yield”—This is the commonly heard explanation for why pension plans shift their portfolios toward alternative assets. But we show that the new portfolios also hold more bonds, offer lower average returns and produce smaller and less volatile solvency deficits. These shifts are part of a broader strategy to reduce solvency risk.
    Keywords: Financial institutions; Financial markets; Financial system regulation and policies
    JEL: G11
    Date: 2021–08
  6. By: Guodong Ding; Daniele Marazzina
    Abstract: In this work we analytically solve an optimal retirement problem, in which the agent optimally allocates the risky investment, consumption and leisure rate to maximise a gain function characterised by a power utility function of consumption and leisure, through the duality method. We impose different liquidity constraints over different time spans and conduct a sensitivity analysis to discover the effect of this kind of constraint.
    Date: 2021–08
  7. By: Assaf Razin; Alexander Horst Schwemmer
    Abstract: It has been well recognized that population ageing could generate structural changes centered around the dwindling labor force, on one hand, and the expanding dependency on the generosity of the welfare state, on the other hand. Ageing-related welfare state policy entails both fiscal issues and migration issues. The paper employs a general-equilibrium model with a policy-making focus, to help understand the mechanism governing the provision of social benefits, labor income taxation, capital income taxation, migration curbs on low skilled and high skilled, driven by the ageing of the population. Greater generosity of the welfare state comes together with policy, incentive compatible with the interests of the majority voters, of a more liberal migration policy.
    JEL: F3 H0
    Date: 2021–08
  8. By: Douglas, Roger (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: All we need is a new welfare system, Superannuation - The miracle of compound interest normally works against ordinary people, now it works for us - Once the savings policies outlined in this paper are fully mature, 95% plus of all New Zealanders will retire with 4-5 million dollars in their super fund accounts. No longer will New Zealanders get less out in pensions than the government takes in taxes. Old age will never be a reason for poverty again. Health - Vets don’t have waiting lists, nor will New Zealanders when every New Zealander has a comprehensive catastrophic health policy ever year of their life. Patients with private insurance rarely have to queue. The policy outlined in this paper, gives you back your tax dollars, in a way that enables you to purchase your own insurance policy. Education - Will once again become the route to advancement, when we cut out the middleman and let parents pay the school direct, then the school will get a dollar for every dollar spent on education. Real equality of opportunity gives the same spending power to everyone- and lets them choose their education. Choice in the educational system will raise our standards of achievement. Choice will give low-income families the same options as everyone else. Housing -Our shared home ownership model of housing will bring home ownership within the reach of everyone who works. Residential section development will be pushed to the maximum extent possible, and at reasonable prices. Out of Work—Being out of work for any reason an accident, being sick or unemployed, will all be covered by the same out of work welfare policy framework, ending any future attempts to fiddle the system. Debt—New Zealand’s one trillion dollars of unfunded welfare debt for health and pensions will disappear over time. Those years of living beyond our means will be behind us and taxes will drop as a consequence. Poverty - The superannuation and health policies outlined in this paper will ensure that old age will never be a cause of poverty in New Zealand again. Far lower taxes allow workers to keep more of what they earn, much better incentives for people to work, better education and health policies will all help to lower poverty and keep it there. Economy—The lowest personal taxes in the world. That makes us one of the most attractive countries in the world. Taken together the policies in this paper will produce a strong and sustainable economic surge in New Zealand, and as a result our opportunities in life will be transformed.
    Date: 2021–07
    Abstract: Theories are guided principles defining facts while using the outcome to predict the future. To some extent, hypotheses have also been used in support of several ideologies leading to theoretical evidence for scientists and the general public. In this perspective, financial theories are adopted to address debt and equity ethical dilemmas more so within pension fund portfolios according to financial pundits. Over time, pension fund managers in Kenya have been reaching out for known theories for possible adoption underpinning principals and theoretical framework when juggling with debts and equity decisions. This paper therefore addresses specific concerns raised by several proponents regarding financial theory practices interventions while considering relevant variables for the study. The conclusion of the matter is that the study illustrates how theories can be put into practice more so during decision making processes on specific portfolios.
    Keywords: Capital structure theories, Pension fund portfolios, financial theories and practices, Debts and equity investments, Optimal Levels, Exploratory Variable s. Debt equity ratios
    JEL: G21
    Date: 2021–08–16
  10. By: Berning, Joshua P.; Bayham, Jude; Bonanno, Alessandro; Cleary, Rebecca; Baishya, Pratiksha
    Keywords: Food Consumption/Nutrition/Food Safety, Consumer/Household Economics, Health Economics and Policy
    Date: 2021–08

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