nep-age New Economics Papers
on Economics of Ageing
Issue of 2021‒09‒27
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pensiones y reforma pensional: efectos macroeconómicos del envejecimiento en Colombia By Fernando Arias-Rodríguez; Julián A. Parra-Polanía
  2. Nursing home aversion post-pandemic: Implications for savings and long-term care policy By Bertrand Achou; Philippe De Donder; Franca Glenzer; Minjoon Lee; Marie-Louise Leroux
  3. Shocks, Institutions and Secular Changes in Employment of Older Individuals By Richard Rogerson; Johanna Wallenius
  4. Financial Literacy and the Timing of Tax-Preferred Savings Account Withdrawals By Marianne Laurin; Derek Messacar; Pierre-Carl Michaud
  5. Wealth Accumulation and Retirement Preparedness in Cross-National Perspective: A Gendered Analysis of Outcomes among Single Adults By Janet Gornick; Eva Sierminska
  6. Population growth and automation density: theory and cross-country evidence By Ana Lucia Abeliansky; Klaus Prettner

  1. By: Fernando Arias-Rodríguez; Julián A. Parra-Polanía
    Abstract: Analizamos los efectos que tendría el envejecimiento poblacional en las próximas décadas sobre el sistema pensional colombiano y sobre diferentes variables macroeconómicas. También consideramos el impacto de implementar gradualmente algunas reformas (aumento en la edad de pensión, reducción en la tasa de reemplazo y aumento de la porción de vida laboral considerada para el cálculo de la pensión del régimen de reparto). La disminución en la tasa de crecimiento poblacional afectaría considerablemente los retornos reales del régimen de reparto y, por tanto, para mantener las condiciones actuales de pensión de ese régimen se requeriría un incremento significativo en el cobro de impuestos. En contraste, con la implementación de las reformas analizadas, poco a poco se irían reduciendo los subsidios otorgados en el régimen de reparto. La consecuente disminución de impuestos y el aumento del ahorro en la economía, y por tanto del nivel de capital, incrementarían la productividad del trabajo y producirían tanto una subida del salario real como una caída de la tasa de interés real. Como consecuencia de las reformas y sus efectos se reducirían en gran medida las diferencias de bienestar entre regímenes pensionales y aumentaría, en el largo plazo, el bienestar de todos los individuos, tanto en el régimen de ahorro como en el de reparto. **** ABSTRACT: We analyze the effects of population aging in the next decades on the Colombian pension system and on several macroeconomic variables. We also consider the impact of several reforms that are gradually implemented in the economy (increasing the retirement age, reducing the replacement rate, and increasing the number of years considered in calculating pensions in the Pay-As-You-Go regime (PAYG)). A diminishing population growth rate would considerably affect the real returns of the PAYG; therefore, in maintaining the current pension conditions under such a regime, significant increases on taxes would be required. Conversely, with the implementation of the parametric reforms considered, the subsidies granted under PAYG regime would slowly be reduced. The resulting lower tax rates and greater savings in the economy, hence a greater capital stock, would increase the labor productivity as well as the real salary. It would also decrease the real interest rate. The welfare gap between pensión regimes could shrink because of the reforms and their effects. In the long run, the welfare of all individuals, irrespective of their pension regime choice, would increase.
    Keywords: pensiones, reforma pensional, análisis macroeconómico, envejecimiento poblacional, régimen de reparto, régimen de ahorro, pensions, pension reform, macroeconomic analysis, population aging, PAYG regime, Fully Funded regime
    JEL: H55 E60 J11 J26 C68
    Date: 2021–09
  2. By: Bertrand Achou; Philippe De Donder; Franca Glenzer; Minjoon Lee; Marie-Louise Leroux
    Abstract: COVID-19 outbreaks at nursing homes during the recent pandemic, which received ample media coverage, may have lasting negative impacts on individuals’ perceptions regarding nursing homes. We argue that this could have sizable and persistent implications for savings and long-term care policies. We first develop a theoretical model predicting that higher nursing home aversion should induce higher savings and stronger support for policies subsidizing home care. We further document, based on a survey on Canadians in their 50s and 60s, that higher nursing home aversion is widespread: 72% of respondents are less inclined to enter a nursing home because of the pandemic. Consistent with our model, we find that the latter are much more likely to have higher intended savings for older age because of the pandemic. We also find that they are more likely to strongly support home care subsidies
    Keywords: Pandemic Risk, Nursing Home, Long-Term Care, Savings, Public Policy
    JEL: D14 H31 H51 H53 I10 I31
    Date: 2021
  3. By: Richard Rogerson; Johanna Wallenius
    Abstract: Employment rates of males aged 55-64 have changed dramatically in the OECD over the last 5 decades. The average employment rate decreased by more than 15 percentage points between the mid-1970s and the mid-1990s, only to increase by roughly the same amount subsequently. One proposed explanation in the literature is that spousal non-working times are complements and that older males are working longer as a result of secular increases in labor supply of older females. In the first part of this paper we present evidence against this explanation. We then offer a new narrative to understand the employment rate changes for older individuals. We argue that the dramatic U-shaped pattern for older male employment rates should be understood as reflecting a mean reverting low frequency shock to labor market opportunities for all workers in combination with temporary country specific policy responses that incentivized older individuals to withdraw from market work.
    Date: 2021–06
  4. By: Marianne Laurin; Derek Messacar; Pierre-Carl Michaud
    Abstract: Tax deductions on contributions to registered savings vehicles are a common policy tool used by governments in many industrialized countries to encourage people to save for retirement. However, these plans do not typically lock in funds, which means savers may also withdraw before retirement when their marginal tax rates are still high and forgo the tax benefit. In this paper, we investigate the extent to which pre-retirement savings withdrawals respond to changes in the net-of-tax benefit of withdrawing and whether such behavior depends on the saver’s financial literacy. To that end, we link respondents of a nationally representative financial capability survey from Canada to over 15 years of administrative tax data. Our results show that the correlation between savings withdrawals and the effective marginal tax rate is negative for those with higher financial literacy, but much weaker and sometimes statistically insignificant for those with lower financial literacy. The findings suggest that financial literacy is an important determinant of the extent to which tax-deductible savings plans are used efficiently.
    Keywords: tax-preferred savings accounts, retirement savings, financial literacy.
    JEL: G53 G51 D14
    Date: 2021
  5. By: Janet Gornick; Eva Sierminska
    Abstract: Wealth is an increasingly important dimension of economic well-being and is attracting rising attention in discussions of social inequality. In this paper, we compare – within and across countries – wealth outcomes, and link those to both employment-related factors and policy solutions that have the potential to improve wealth creation and retirement security for women. By constructing country-specific portraits of wealth outcomes and “retirement preparedness,” we reveal extensive cross-national variation in multiple facets of wealth. Our regression analysis finds a statistically significant and positive effect of work experience on wealth, with that effect, in general, increasing over time. The effect of work experience for single women is greater than for single men, suggesting that, among men, other, stronger forces are at work in creating wealth. The retirement preparedness outcomes indicate that single women in all three countries are in a precarious position at retirement, with much lower expected annual wealth levels than single men. The second preparedness indicator, which links expected annual wealth to income, demonstrates that men have the potential to cover larger shares of their income at retirement – and thus are more able, than their female counterparts, to maintain standards of living achieved earlier in life. Our policy discussion indicates that employment remains a viable option for ultimately bolstering women’s wealth accumulation. Many scholars, gender equality advocates, and policymakers have argued for raising women’s employment rates – for a multitude of reasons – but few, if any, have made the case for strengthening women’s employment in order to ultimately bolster women’s wealth building. We hope to help reduce the gap in the literature on policy supports for women’s employment and re-open the discussion on how women can create more wealth.
    Date: 2021–07
  6. By: Ana Lucia Abeliansky (Department of Economics, Vienna University of Economics and Business); Klaus Prettner (Department of Economics, Vienna University of Economics and Business)
    Abstract: We analyze the effects of declining population growth on automation. Theoretical considerations imply that countries with lower population growth introduce automation technologies faster. We test the theoretical implication on panel data for 60 countries over the time span 1993-2013. Regression estimates support the theoretical implication, suggesting that a 1% increase in population growth is associated with an approximately 2% reduction in the growth rate of robot density. Our results are robust to the inclusion of standard control variables, different estimation methods, dynamic specifications, and changes with respect to the measurement of the stock of robots.
    Keywords: Automation, Industrial Robots, Demographic Change, Declining Fertility
    JEL: J11 O33 O40
    Date: 2021–09

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