nep-age New Economics Papers
on Economics of Ageing
Issue of 2022‒06‒20
fourteen papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pension reform, incentives to retire and retirement behavior: empirical evidence from Swedish micro-data. By Laun, Lisa; Palme, Mårten
  2. Financial Sustainability and Adequacy Issues on Social Security Pensions By Takayama, Noriyuki;
  3. Socioeconomic inequalities in survival to retirement age or shortly afterwards: a register-based analysis By Strozza, Cosmo; Vigezzi, Serena; Callaway, Julia; Kashnitsky, Ilya; Aleksandrovs, Aleksandrs; Vaupel, James W
  4. Life care annuities to help couples cope with the cost of long-term care By Manuel Ventura-Marco; Carlos Vidal-Meliá; Juan Manuel Pérez-Salamero González
  5. Older Mothers' Employment and Marriage Stability When the Nest Is Empty By D'Albis, Hippolyte; Doorley, Karina; Stancanelli, Elena G. F.
  6. Saving preferences after retirement By Ralph Stevens; Jennifer Alonso Garcia; Hazel Bateman; Arthur van Soest; Johan Bonekamp
  7. The revenue potential of inheritance taxation in light of ageing societies By KRENEK Alexander; SCHRATZENSTALLER Margit; GRUNBERGER Klaus; THIEMANN Andreas
  8. Visión multidisciplinaria de los derechos humanos de las personas mayores By -
  9. Replacement rates of public pensions in Canada: heterogeneity across socio-economic status By Nicholas-James Clavet; Mayssun El-Attar; Raquel Fonseca
  10. Gender, Financial Literacy and Pension Savings By Preston, Alison; Wright, Robert E.
  11. La retraite : un évènement protecteur pour la santé de tous By Thomas Barnay; Éric Defebvre
  12. Permanent and transitory earnings dynamics and lifetime income inequality in Sweden By Gustafsson, Johan; Holmberg, Johan
  13. Linking the health of older people in places with labour market outcomes for all: does it matter how we measure health? By Murray, Emily T; Head, Jenny; Shelton, Nicola; Beach, Brian; Norman, Paul
  14. The Distribution of Occupational Tasks in the United States: Implications for a Diverse and Aging Population By Samuel Cole; Zachary Cowell; John M. Nunley; R. Alan Seals Jr

  1. By: Laun, Lisa (IFAU - Institute for Evaluation of Labour Market and Education Policy); Palme, Mårten (Department of Economics, Stockholm University)
    Abstract: This paper investigates to what extent the 1998 reform of Sweden’s public old-age pension system contributed to the increase in extensive margin labor supply among older workers seen in the country in recent decades. We use a large data set containing all males and females born in Sweden between 1927 and 1950 and observe their retirement behavior during 1991–2012. The data show that the reform changed the incentives to remain in the labor force ambiguously: although it induced an income effect towards later retirement through lower replacement levels,it also implied a lower price on leaving the labor market under some assumptions. We use an econometric model in which the economic incentives to stay in the labor market are measured by Social Security Wealth, defined at each hypothetical retirement age, and a variable measuring the implicit tax, imposed by the income security system, on staying in the labor force. The point estimates from our econometric model, which should be interpreted with caution, suggest that at most a small part of the increase in labor force participation of the elderly can be attributed to the pension reform.
    Keywords: retirement; pension; reform; incentives to retire
    JEL: H30 J10 J20
    Date: 2022–04–28
  2. By: Takayama, Noriyuki;
    Abstract: Social security pensions have two major requirements for satisfying the sincere desire of the public. One is financial sustainability, and the other is the adequacy of benefits. As the population aging went on, financial sustainability became more serious in almost all countries. A long list of policy options to ensure financial sustainability has been demonstrated globally. They are usually painstaking with tears and quite unpopular to the public. Nevertheless, many developed countries have already managed to implement these policy measures. The other requirement, adequacy, is desired for the elderly to maintain a decent living standard after retirement. If any pension system fails to meet this requirement, it will be politically unsustainable. Financial sustainability often violates the adequacy requirement. However, both requirements will not always be compatible with each other. Sophisticated balances between them are necessary for pension policymaking. This chapter first gives an overview of making social security pension systems financially sustainable. Ample experiences in developed countries are illustrated. Before going into discussions, fundamental characteristics of social security pensions and a need for periodic actuarial evaluations are mentioned. Second, it demonstrates the basic contents of pension adequacy from an economic perspective, explaining various relationships to poverty alleviation.
    Date: 2022–05
  3. By: Strozza, Cosmo (University of Southern Denmark); Vigezzi, Serena; Callaway, Julia (University of Southern Denmark); Kashnitsky, Ilya (University of Southern Denmark); Aleksandrovs, Aleksandrs; Vaupel, James W
    Abstract: Larger numbers of people are living to retirement and old age, posing a threat to the financing of the welfare state. In Denmark, statutory retirement age is increasing gradually to account for changes in life expectancy. However, the chances of reaching retirement age are not equal across the population, and raising the retirement age could disproportionally affect those from lower socioeconomic backgrounds. In this paper, we investigate socioeconomic inequalities in mortality before retirement age or shortly thereafter in Denmark. We use Danish registry data over a 30-year period, focusing on individuals aged 50 to 70. We perform sex-specific survival analyses across socioeconomic groups using three measures of socioeconomic status: education, income, and occupation. We observe an increase in survival inequalities over time between the lowest and highest socioeconomic groups for each measure. The reason for the widening gap lies in minimal mortality improvements in the lowest socioeconomic group. These results are complemented by lifespan inequality measures, which have the same mortality trends. We show that individual level variability in socioeconomic characteristics play a crucial role in defining the survival chances just before and shortly after retirement and thus should be accounted for in designing retirement policies.
    Date: 2022–04–29
  4. By: Manuel Ventura-Marco (Department of Financial Economics and Actuarial Science, University of Valencia, Valencia. (Spain)); Carlos Vidal-Meliá (Department of Financial Economics and Actuarial Science, University of Valencia (Spain) and research affiliate with the Instituto Complutense de Análisis Económico (ICAE), Complutense University of Madrid (Spain).); Juan Manuel Pérez-Salamero González (Department of Financial Economics and Actuarial Science, University of Valencia, Valencia. (Spain))
    Abstract: This paper examines the possibility of including cash-for-care benefits in life care annuities (LCAs) to help retired couples cope with the cost of long-term care (LTC). It aims to assess how much it would cost to add an extra stream of payments to annuities for couples should either or both require LTC. We present an actuarial method based on array calculus to value this type of LCA. The impact of introducing the LTC contingency on the annuity is assessed by comparing the initial benefits in both cases. The difference in the initial benefit arises due to the annuity factors used to compute the benefits. We also analyse how willing couples would be to choose this type of LCA. Using Australian LTC transition probability data for a realistic calibration and assuming independence of the risks involved, we numerically illustrate the model and the theoretical findings implied. The paper highlights the importance of reporting the expected years both spouses will be alive (joint life expectancy) and the expected years the surviving spouse will be a widow(er) (survivor life expectancy) broken down by health state, given that this information makes the computation of the actuarial factors transparent and provides highly useful information to help the couple understand the need to be protected against the cost of LTC services.
    Keywords: Australia; Couples; Joint life expectancy; Illness-death multistate model; Life Care Annuities; Long-Term Care Insurance; Retirement.
    JEL: G22 H55 I13 J14 J26
    Date: 2022
  5. By: D'Albis, Hippolyte (University of Toulouse I); Doorley, Karina (Economic and Social Research Institute, Dublin); Stancanelli, Elena G. F. (Paris School of Economics)
    Abstract: A significant literature in the social sciences addresses the impact of child-bearing and rearing on marital stability and on mothers' labour market outcomes. Much less is known about older mothers' employment and marriage patterns when the adult children leave the parental nest. This study aims to shed light on these issues using longitudinal labour force data for France. Exploiting retirement laws for identification purposes, and taking a regression discontinuity approach, we find that older women's retirement probability is positively associated with an empty nest. We also conclude that an empty nest is negatively associated with older mothers' marriage probability. There is scope for better targeting of both family and retirement policies for older mothers during those critical years when adult children leave the parental nest.
    Keywords: ageing, retirement, divorce
    JEL: J12 J14 J22
    Date: 2022–05
  6. By: Ralph Stevens; Jennifer Alonso Garcia; Hazel Bateman; Arthur van Soest; Johan Bonekamp
    Date: 2022–04–30
  7. By: KRENEK Alexander; SCHRATZENSTALLER Margit; GRUNBERGER Klaus (European Commission - JRC); THIEMANN Andreas (European Commission - JRC)
    Abstract: Based on the most recent data from the ECB’s Household Finance and Consumption Survey, the project models the future household-level wealth distribution in five selected EU member countries (Finland, France, Germany, Ireland, and Italy) to derive inheritances based on different demographic and wealth projection scenarios. On this basis, various inheritance tax scenarios are simulated to estimate potential inheritance tax revenues for a projection period of 30 years. Our results indicate that multiple factors coincide in favouring a growing revenue potential for inheritance taxation in the medium-term. Wealth accumulation and appreciation lead to higher average wealth levels. The shift of the baby boomer generation out of the labour force results in an increase of the older population both in absolute and relative terms. Eventually, this will lead to a rise in the number of deaths and the number of inheritances. Additionally, low fertility rates lead to a reduction of the average number of successors and thereby decrease the importance of exemption thresholds. Overall, our simulations show that the future revenue potential of inheritance taxes may be substantial. In practice, it can be expected that the theoretical revenue potential demonstrated by our simulations will be reduced by tax avoidance, real responses, and general equilibrium effects on other taxes. A review of the empirical evidence shows that behavioural responses to inheritance taxes are less pronounced compared to a net wealth tax.
    Keywords: inheritance taxation, wealth taxation, ageing, HFCS, behavioural effects
    Date: 2022–05
  8. By: -
    Abstract: En este libro se presenta una perspectiva multidisciplinaria y contemporánea de los derechos humanos de las personas mayores. Se proveen elementos conceptuales y ejemplos de prácticas sobre cómo promover y proteger los derechos humanos de este grupo social en ámbitos que han sido clave durante la pandemia por COVID-19. Se trata de una contribución inédita construida a partir de reflexiones y propuestas de autores de la región y de fuera de ella.
    Date: 2022–04–13
  9. By: Nicholas-James Clavet; Mayssun El-Attar; Raquel Fonseca
    Abstract: When individuals decide to retire from the labour force, different sources of income can help to maintain consumption and welfare. One of those is public pensions. Their importance as an income source varies greatly according to socio-economic status (SES). This paper analyzes how replacement rates (RR) of public pensions (OAS and GIS) and mandatory public pension benefits (C/QPP) vary across SES by using the Longitudinal and International Study of Adults dataset (LISA). Using the longitudinal nature of this survey, we compute and compare average RRs by SES. We specifically consider the role of education and health, and we study how living arrangements can explain RRs variations. To give an idea the average RR of public pensions for individuals in bad health is 32%, while it is 21% for those who report being in good health. Including public pensions and C/QPP benefits, these numbers become 54% for those in bad health and 41% for those in good health. When estimating a multivariate regression model and controlling for past income, we find for couples, that past income does not eliminate differences in replacement ratio by individuals’ characteristics. We argue that assortative mating plays a role in explaining the variation of replacement rates across individuals’ characteristics. To quote this document Clavet N-J., El-Attar M. and Fonseca R. (2022). Replacement rates of public pensions in Canada: heterogeneity across socio-economic status (2022s-11, CIRANO). Lorsque les individus décident de se retirer de la vie active, différentes sources de revenus peuvent contribuer à maintenir la consommation et le bien-être. L'une d'entre elles sont les pensions publiques. Leur importance en tant que source de revenu varie grandement en fonction du statut socio-économique (SSE). Cet article analyse comment les taux de remplacement (TR) des pensions publiques (SV et SRG) et des prestations de retraite publiques obligatoires (RPC/RRQ) varient selon le SSE en utilisant l'ensemble de données de l'Étude longitudinale et internationale des adultes (LISA). Grâce à la nature longitudinale de cette enquête, nous calculons et comparons les TR moyens selon le SSE. Nous considérons spécifiquement le rôle de l'éducation et de la santé, et nous étudions comment les conditions de vie peuvent expliquer les variations des TR. Pour donner une idée, le TR moyen des pensions publiques pour les individus en mauvaise santé est de 32%, alors qu'il est de 21% pour ceux qui déclarent être en bonne santé. Si l'on inclut les pensions publiques et les prestations du RPC/RRQ, ces chiffres deviennent 54 % pour les personnes en mauvaise santé et 41 % pour celles en bonne santé. En estimant un modèle de régression multivarié et en contrôlant le revenu antérieur, nous constatons pour les couples, que le revenu antérieur n'élimine pas les différences de ratio de remplacement selon les caractéristiques des individus. Nous soutenons que le choix d’un conjoint avec des caractéristiques similaires joue un rôle dans l'explication de la variation des taux de remplacement selon les caractéristiques des individus. Pour citer ce document Clavet N-J., El-Attar M. and Fonseca R. (2022). Replacement rates of public pensions in Canada: heterogeneity across socio-economic status (2022s-11, CIRANO).
    Keywords: Replacement rates,retirement,Canadian public pensions,LISA, Taux de remplacement,retraite,pensions publiques canadiennes,LISA
    JEL: H55 J26
    Date: 2022–05–17
  10. By: Preston, Alison (University of Western Australia); Wright, Robert E. (University of Glasgow)
    Abstract: Using micro-data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey this paper examines the relationship between the gender gap in financial literacy and the gender gap in pension savings amongst non-retired adults aged 18-64 in 2018. A simple theoretical model is presented. It implies two empirical specifications: a reduced-form specification where the focus is on pension savings and a more structural specification where the focus is on the "pension return" (the ratio of pension savings to cumulative earnings). Oaxaca-Blinder decomposition analysis suggests that around 8.5 per cent of the gender gap in pension savings may be attributed to the gender gap in financial literacy. This finding holds even in the presence of controls for financial risk tolerance. Policy implications and directions for future research are discussed in the paper.
    Keywords: pension savings, superannuation, financial literacy, gender gap, decomposition
    JEL: H53 J16 J32
    Date: 2022–04
  11. 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, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    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: Risques psychosociaux,Conditions de travail physiques,Retraite,Santé physique et mentale
    Date: 2022–03–31
  12. By: Gustafsson, Johan (Department of Economics, Umeå University); Holmberg, Johan (Department of Economics, Umeå University)
    Abstract: This paper studies the role of permanent- and transitory earnings variability for lifetime income inequality in Sweden. We fit a permanent–transitory error component model to the autocovariance structure of earnings using administrative data for 2002–2015 and minimum distance estimation. We find that permanent earnings inequality increased during the first decade and that the financial crisis of 2008 temporarily heightened earnings volatility. Using this model, we simulate pensions and study lifetime income inequality. We find that permanent earnings differences generally contributes the most to lifetime income inequality. We conclude that the Swedish pension system provides some insurance against earnings risk, but accentuates the role of permanent earnings differences in explaining lifetime inequality.
    Keywords: Permanent-transitory; Income pension entitlements; earning dynamics; life-cycle inequality
    JEL: H55 I24 J31 J62
    Date: 2022–05–24
  13. By: Murray, Emily T; Head, Jenny; Shelton, Nicola; Beach, Brian; Norman, Paul
    Abstract: Background Inequalities between different areas in the UK according to health and employment outcomes are well-documented. Yet it is unclear which health indicator is most closely linked to labour market outcomes, and whether associations are restricted to the older population. Methods We used the ONS Longitudinal Study (LS) to analyse which measures of health-in-a-place were cross-sectionally associated with three employment outcomes in 2011: not being in paid work, working hours (part-time, full-time), and economic inactivity (unemployed, retired, sick/disabled, other). Nine health indicators from local-authority census and vital records data were chosen to represent the older working age population (50-74y) and linked with LS data. Interactions by gender and age category (16-49y vs 50-74y) were tested. Findings For all health-in-a-place measures, LS members aged 16-74 who resided in the tertile of local authorities with the ‘unhealthiest’ older population, had higher odds of not being in paid work, including all four types of economic inactivity. The strongest associations were seen for the health-in-a-place measures that were self-reported, long-term illness and self-rated health (SRH) (OR 1·60 [95% CI 1·52–1·67/8]). Within each measure, associations were slightly stronger for men than women and for the 16-49y versus 50-74y LS sample. In models adjusted for individual SRH and gender and age category interactions, health-in-a-place gradients were apparent across all economic inactivity’s. However, these same gradients were only apparent for women in part-time work and men in full-time work. Interpretation Improving health of older populations may lead to wider economic benefits for all. Funding Health Foundation
    Date: 2022–04–21
  14. By: Samuel Cole; Zachary Cowell; John M. Nunley; R. Alan Seals Jr
    Abstract: We document the age-race-gender intersectionality in the distribution of occupational tasks in the United States. We also investigate how the task content of work changed from the early-2000s to the late-2010s for different age-race/ethnicity-gender groups. Using the Occupation Information Network (O*NET) and pooled cross-sectional data from the American Community Survey (ACS) we examine how the tasks that workers perform vary with age and over time. We find that White men transition to occupations high in non-routine cognitive tasks early in their careers, whereas Hispanic and Black men work mostly in physically demanding jobs over their entire working lives. Routine manual tasks increased dramatically for 55-67 year-old workers, except for Asian men and women. Policymakers will soon be challenged by financial stress on entitlement programs, reforms could have disproportionate effects on gender and racial/ethnic groups due to inequality in the distribution of occupational tasks.
    Date: 2022–05

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