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on Economics of Ageing |
| By: | Samuel Pienknagura; Christopher Evans |
| Abstract: | Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density. |
| Date: | 2021–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/232&r= |
| By: | Marianne Tenand (CPB Netherlands Bureau for Economic Policy Analysis); Pieter Bakx (Erasmus University Rotterdam); Bram Wouterse (Erasmus University Rotterdam) |
| Abstract: | In 2013, a reform (the vermogensinkomensbijtelling) increased co-payments for long-term care for people with financial wealth. A shown in a new empirical study, it induced older people to postpone nursing home use, but only by a few days on average. The reform reduced the financial pressure on the long-term care system, but at the cost of raising the financial risk of older adults. In 2013, a reform (the vermogensinkomensbijtelling) increased co-payments for long-term care for people with financial wealth. A shown in a new empirical study, it induced older people to postpone nursing home use, but only by a few days on average. The reform reduced the financial pressure on the long-term care system, but at the cost of raising the financial risk of older adults. With population aging, many countries seek to keep long-term care accessible while containing public spending. Co-payments play a role in balancing these goals by shifting parts of the costs to users and providing an incentive to only use necessary care. However, evidence on how co-payments affect care use, health and financial risk is limited. A 100-euro increase in the monthly price of nursing home care lowers the time spent in a nursing home by 0.8 day. The offsetting increase in home care use is small and there is no overall effect on mortality. Because some people end up staying many years in a nursing home, the limited increase in the monthly co-payment induced a substantial rise in lifetime co-payments. A cap on lifetime co-payments would limit the associated financial risk while preserving the incentive to postpone an admission. |
| JEL: | C24 D12 I18 J14 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:430&r= |
| By: | Taguchi, Hiroyuki |
| Abstract: | This paper aims to examine the effects of demographic dynamics on economic growth with a focus on working-age population and saving rate in 17 Asian economies for the past period from 1970 to 2018 and for the future period from 2018 to 2050. For the analytical methodology, this study applies a panel vector autoregressive model considering endogenous interactions among concerned variables. The main findings are summarized as follows: first, the estimation identified both the direct channel from working-age population share to economic growth and the indirect channel through saving rate; second, the estimated result also found the feedback effect from economic growth to saving rate; third, the contribution ratio of the demographic effect to economic growth for the past period, around 30 percent on average, is consistent with those in previous studies; and fourth, in the projection for 2018-2050, the degrees of the negative demographic effects in sample economies are getting larger than those of previous studies, due to the earlier-coming population onus with aging. |
| Keywords: | demographic dynamics, economic growth, Asia, saving rate, working-age population, panel vector-autoregressive model |
| JEL: | J11 O11 O53 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110609&r= |
| By: | Courtney Coile |
| Abstract: | As Americans work longer in response to a changing retirement landscape, it is important to ask whether there are groups being left out of this trend. Geography is a natural lens through which to examine this question, given regional disparities in the employment of prime-age individuals. In this study, we explore the geography of retirement using data from the U.S. Census/American Community Survey and other sources. We find large differences across U.S. commuting zones in employment rates at older ages, with a gap of about 20 percentage points between areas at the 90th and 10th percentiles of employment. Low-employment areas are systematically different, with a less educated and more diverse population, more low-wage jobs and import competition from China, poorer health outcomes and health care access, lower government spending, and more income inequality. Although these correlations are not necessarily causal, these factors collectively can explain about four-fifths of the geographic variation in employment at older ages. |
| JEL: | J22 J26 R23 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29433&r= |
| By: | Thomas Bernhardt; Ge Qu |
| Abstract: | The income stability of a closed pooled annuity fund is studied. The focus is on quantifying the impact of inhomogeneous initial savings amounts on idiosyncratic longevity risk. Besides wealth inhomogeneity, the members of the pool are independent and identical copies of each other. We ignore systematic investment risk or mortality risk and define income stability as keeping the income within a specified tolerance of each member's initial income payment in a fixed proportion of future scenarios. For a given group of people with different savings amounts, we find an analytical expression that closely approximates the time for which the fund provides a stable income. Our main result uses this expression to determine if everyone benefits from pooling their funds with the whole group or how to split a cohort into different pooled annuity funds. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2110.13467&r= |