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on Economics of Ageing |
| By: | Jeffrey R. Brown; James M. Poterba; David P. Richardson |
| Abstract: | This paper documents trends over the last two decades in retirement behavior and retirement income choices by participants in TIAA, a large and mature defined contribution plan with a wide range of withdrawal options. Between 2000 and 2018, the average retirement age rose by approximately 1.3 years for female and 2 years for male participants. There is considerable variation in the elapsed time between the last contribution to and the first income draw from participants’ plan accounts; only 40% take an initial income payment within 48 months of their last contribution, which is likely to coincide with retirement. Later retirement and lags between retirement and the first retirement income payout led to a growing fraction of participants reaching the Required Minimum Distribution (RMD) age before starting income draws. The fraction of first-time income recipients who took no income until their RMD rose from 10% (2000) to 52% (2018), while the fraction of these recipients who selected a life-contingent annuitized payout stream declined from 61 to 18%. Among those who began receiving income before age 70, annuitization rates were significantly higher than among those who did so at older ages. Aggregating across all income recipients at a point in time, not just the new recipients, the proportion who had a life annuity as part of their payout strategy fell from 52% in 2008 to 31% in 2018. At the same time, the proportion of all income recipients taking an RMD payment rose from 16 to 29%. About one-fifth of retirees received more than one type of income; the most common pairing was an RMD and a life annuity. The data suggest that the RMD is becoming the de facto default distribution option for newly-retired TIAA participants. |
| JEL: | H24 H55 J14 J32 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29946&r= |
| By: | Joseph Kopecky; Alan M. Taylor |
| Abstract: | Population aging has been linked to a global savings glut and a decline in safe real interest rates. Conversely, risky real returns have not fallen as much, if at all, with equity risk premia on the rise. An existing literature can explain changes in safe rates using demographics. We go further to account for divergent returns on different assets as well as the underlying surge in the wealth-income ratio and its asset composition. Empirical evidence from historical panel data shows that demographic shifts are correlated with asset returns and risk premia. We build a heterogeneous agent life-cycle model with two assets (a safe bond and equity) and with aggregate risk. Aging demographics can help to simultaneously explain three key trends: the rising wealth-income ratio, the falling risk free rate, and an increasing risk premium. The shifts exert less pressure on risky returns as high-wealth elderly reallocate away from equities: aging makes retirement saving a “crowded trade” but more so for bonds. Projecting our model to 2050, aging pushes the safe rate below zero, but the risk premium remains elevated, as post-boomer demographics push asset returns to unprecedented and persistently low levels. |
| JEL: | E21 E43 G11 J11 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29944&r= |
| By: | Jonathan A. Parker; Antoinette Schoar; Allison T. Cole; Duncan Simester |
| Abstract: | This paper documents the share of investable wealth that middle-class U.S. investors hold in the stock market over their working lives. This share rises modestly early in life and falls significantly as people approach retirement. Prior to 2000, the average investor held less of their investable wealth in the stock market and did not adjust this share over their working life. These changes in portfolio allocation were accelerated by the Pension Protection Act (PPA) of 2006, which allowed employers to adopt target date funds (TDFs) as default options in retirement saving plans. Young retail investors who start at an employer shortly after it adopts TDFs have higher equity shares than those who start at that same employer shortly before the change in defaults. Older investors rebalance more to safe assets. We also study retirement contribution rates over the life-cycle and find that average retirement saving rates increase steadily over the working life. In contrast to what we find for investment in the stock market, contribution rates have been stable over time and across cohorts and were not increased by the PPA. |
| JEL: | D14 E21 G11 G23 G28 G51 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29881&r= |
| By: | Rainer Kotschy; David E. Bloom |
| Abstract: | This paper investigates challenges of aging for long-term care. Our analysis proceeds in three steps. In the first step, we estimate the prospective care demand for 30 developed countries based on projected aging and disabilities among the elderly. In the second step, we outline challenges for care systems with respect to shortages of care workers, increasing skill requirements for care workers, barriers to universal and equitable access to care, and cost containment subject to adequate care quality. In the third step, we identify solutions for these challenges by comparing the care systems of Germany, Israel, Japan, the Netherlands, and South Korea. |
| JEL: | H51 H75 I18 I38 J11 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29951&r= |
| By: | Yang, Jinyang (Virginia Tech); Chen, Xi (Yale University) |
| Abstract: | We examine the multigenerational impacts of a nationwide social pension program in China, the New Rural Pension Scheme (NRPS). NRPS was rolled out in full scale since 2012, and rural enrollees over age 60 are eligible to receive a minimum of 70 CNY non-contributory monthly pension. We leverage age eligibility and variations in pension receipt to identify the inter-generational effect of NRPS on health among grandchildren. We find NRPS substantially increases child weight without impacting height. Overall, child BMI z score increases by 1.09, which is largely driven by grandfathers' pension receipt raising rates of overweight and obesity among grandsons. Among the potential mechanisms, our findings are more plausibly explained by a mixture of income effect, son preference, and rising inter-generational co-residence and childcare. |
| Keywords: | social pension, child health, inter-generational relationship, intra-household allocation, migration, living arrangement, China |
| JEL: | H23 H31 H55 I38 J22 O15 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15239&r= |
| By: | Tim Krieger; Christine Meemann; Stefan Traub |
| Abstract: | In most OECD countries, pension reform policy has decreased the level of intragenerational redistribution over the last three decades, that is, redistribution among members of the same generation with high and low pension entitlements. This trend has occurred despite heterogeneity in life expectancy linked to socioeconomic status having a regressive impact on out-comes. This paper contributes to solving this puzzle by means of a controlled laboratory experiment. We study the causal relationship between inequality of entitlements, mortality risk, and the size of redistribution in a stylized social security system. We find that mortality risk, when negatively correlated with entitlements, significantly lowers subjects’ willingness to redistribute payoffs from high-entitlement to low-entitlement subjects. We explain this finding with efficiency preferences and an alienation effect. The alienation effect is the tendency to attach a lower social weight to the short-lived poor. |
| Keywords: | inequality, life expectancy, risk, redistribution, pension reform, efficiency preferences, alienation effect experiment |
| JEL: | D63 D81 H55 I14 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9677&r= |
| By: | Uchida, Yuki; Ono, Tetsuo |
| Abstract: | We demonstrate the interaction between short-lived governments’ decisions on education and pension policies and parents’ decisions on fertility in an overlapping generations growth model. Our analysis shows that increased expected life expectancy lowers fertility, decreases the ratio of education expenditure to GDP, and increases the ratio of pension benefits to GDP as well as per capita GDP growth rate. We also consider a reform that reduces pension benefits designed by a long-lived planner and show that the reduction is optimal from a social welfare perspective when the planner gives a large weight to future generations. |
| Keywords: | Fertility; Public Pension; Public Education; Probabilistic Voting; Overlapping Generations |
| JEL: | D70 E62 H52 H55 |
| Date: | 2022–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112748&r= |
| By: | Quitterie Roquebert |
| Abstract: | Informal care, defined as unpaid care provided by relatives, plays a major role in long-term care provision. While much attention has been paid to informal care provided to older persons in the community, little is known on the role of relatives as caregivers in nursing homes. Evidence, however, suggest that relatives are still providing concrete care for people living in nursing homes. This paper analyzes the causal effect of informal care provided by children on mental health for individuals living in nursing homes. We take into account gender differences, considering both the gender of caregivers and the gender of care recipients. We exploit the cross-sectional French survey Care-Institution (2016) which provides a sample of 2,382 individuals representative of the 60+ individuals living in a nursing home and having children. Mental health outcomes are the probability of declaring depression, sleep disorders, poor appetite and feeling of weariness. To deal with the endogeneity of informal care to health variables, we exploit an instrumental variable strategy where the probability of receiving informal care is instrumented by the geographical proximity of children. Results show that in general, informal care provided by children positively affects women's mental health (poor appetite, weariness) while it has no effect on men. It conceals important effects that appear when taking caregiver gender into account. Care provided by daughters has no effect on mental health while care provided by sons is effective in improving mental health of both women (poor appetite) and men (weariness). Public policies should thus take into account the role played by relatives in nursing homes and pay attention to the gender gap in long-term care provision. |
| Keywords: | informal care, nursing homes, gender. |
| JEL: | D10 I10 J14 J16 I18 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2022-08&r= |
| By: | LEOGRANDE, ANGELO |
| Abstract: | Istat calculates the value of life expectancy at birth in the Italian regions. Life expectancy at birth is defined as “[…] the average number of years a child born in a given calendar year can expect to live”. |
| Keywords: | Demographic Economics, Demographic Trends, Macroeconomic Effects, and Forecasts, Fertility • Family Planning • Child Care • Children • Youth |
| JEL: | J10 J11 J13 J19 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112801&r= |
| By: | Eileen Rocard (OECD); Ana Llena-Nozal (OECD) |
| Abstract: | Informal carers – family and friends who perform care - are the first line of support for older people. About 60% of older people who receive care at home report receiving only informal care across OECD countries.While informal carers help to contain public costs, those costs are borne elsewhere. Women perform the majority of informal care, posing a barrier to their labour market participation. It is generally impacted when caring over 20 hours per week. The COVID-19 pandemic has increased pressures on carers.Making informal care a choice without constrains requires a comprehensive set of policies. Countries have taken steps, though more could be done. While access to information has improved, counselling and training depends heavily on the voluntary sector and respite typically remains insufficient. About two-thirds of OECD countries provide direct or indirect cash benefits to informal carers. Nearly two-thirds also mandate paid or unpaid care leave entitlements. |
| JEL: | H51 H53 H75 I31 I38 J48 |
| Date: | 2022–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaad:140-en&r= |
| By: | Emmanuel Paroissien (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Laure Latruffe (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Laurent Piet (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | This article investigates the effects of economic performance and neighbours' characteristics on farmers' exit behaviour before retirement age. Using a unique set of social security data describing all French farmers under 50 over the years 2004–2017, we explore how these effects depend on farmers' characteristics and how they stand relative to their neighbours. Our probit estimations reveal that younger farmers and farmers operating smaller farms are more sensitive to their own and neighbours' performance than other farmers. Allowing for an asymmetric comparison effect between farmers and their neighbours, we uncover a nonlinear influence of own and neighbours' profit and size. |
| Keywords: | Neighbours,Performance,Farms,Exit,Heterogeneity |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03373465&r= |
| By: | XIE Mingjia; YIN Ting; ZHANG Yi; OSHIO Takashi |
| Abstract: | Declining fertility and increasing health expenditure associated with aging populations pose great challenges to public finance globally. This paper studies the hidden cost of fertility by analyzing the causal effect of fertility on the elderly’s healthcare utilization. We use the instrumental variable approach to account for the potential endogeneity in the fertility choice, exploiting the exogenous variations in fertility induced by the "1.5-Child Policy" in rural China. We find that having more children increases the probability and out-of-pocket expenditures of using formal and informal healthcare. Increased healthcare use can be driven by deteriorating physical and mental health and increasing intergenerational support. Children of the elderly are more likely to help them pay health costs and make monetary transfers to their parents, suggesting that the increased burden of healthcare cost is partly borne by the children. Women and lower educated parents who have limited economic resources and less generous health insurance tend to bear a higher increase in health costs with more children. The results imply that the true cost of birth-encouraging policies can be underestimated if the effect of fertility on healthcare utilization is overlooked, and such policies might increase inequality if no supportive measures are provided to disadvantaged groups. |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:22033&r= |
| By: | Thomas Barnay (UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel); Éric Defebvre (UP1 - Université Paris 1 Panthéon-Sorbonne, ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel) |
| Abstract: | Using data from the French Health and Professional Path survey, we show that retirement has positive effects on the health of less exposed individuals while yielding considerably greater improvements for workers retiring from highly demanding careers. The highest protective influence appears in the low-skilled male population exposed to physical constraints, with a decline of 21.2 pp in the probability of declaring poor health, 16 pp in activity limitations and 13.7 pp in chronic diseases, and 8 pp in anxiety or depression. These results advocate the need for preventive measures aimed towards exposures to work strains and/or differentiated retirement schemes according to the nature and intensity of a pensioner's entire work life. |
| Abstract: | À partir de données françaises issues de l'enquête Santé et Itinéraire Professionnel (Sip), nous montrons que la retraite joue un rôle positif sur la santé, tout particulièrement chez les personnes ayant été exposées à des conditions de travail pénibles. Cette relation est tout particulièrement forte pour les hommes non diplômés ayant été confrontés à des facteurs de risques physiques avec une diminution de 21,2 points de pourcentage (pp) de déclarer une santé perçue dégradée, de 16 pp de déclarer une limitation d'activité, de 13,7 pp de déclarer une maladie chronique et de 8 pp de souffrir d'une dépression ou d'anxiété. Ces résultats plaident en faveur de mesures préventives visant les expositions aux contraintes du travail ou de régimes de retraite différenciés en fonction de la nature et de l'intensité des facteurs de risques professionnels. |
| Keywords: | Santé physique et mentale,Retraite,Conditions de travail physiques,Risques psychosociaux |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03621346&r= |