nep-age New Economics Papers
on Economics of Ageing
Issue of 2022‒10‒10
eight papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. The effects of age and cohort on household saving By Mäki-Fränti, Petri
  2. The Gender Gap in Pension Savings: Evidence from Peru's Individual Capitalization System By Javier Olivera; Yadiraah Iparraguirre
  3. Depression and Loneliness Among the Elderly Poor By Abhijit Banerjee; Esther Duflo; Erin Grela; Madeline McKelway; Frank Schilbach; Garima Sharma; Girija Vaidyanathan
  4. Politics of Public Education and Pension Reform with Endogenous Fertility By Uchida, Yuki; Ono, Tetsuo
  5. The displacement effect of compulsory pension savings on private savings. Evidence from the Netherlands, using pension funds supervisory data By Mauro Mastrogiacomo; Yue Li; Rik Dillingh
  6. Financial Fragility, Financial Literacy and the Early Withdrawal of Retirement Savings During COVID-19 By Alison Preston
  7. Population ageing and labor market frictions. An OLG model applied to Lebanon By Marie Claude Kamar; Riccardo Magnani
  8. Does Demography Determine Democratic Attitudes? By Kotschy, Rainer; Sunde, Uwe

  1. By: Mäki-Fränti, Petri
    Abstract: According to the standard life cycle model, household saving rate should peak at the best working age and turn then to decline so that households dissolve their savings after retirement. This study examines, how age and birth cohort affect the saving behavior of the Finnish households. A synthetic panel data is used to estimate an empirical age-cohort-period model of income, consumption and saving rate of the households. The results suggest that the Fnnish households continue saving even in the old age and younger cohohorts tend to save more than the older ones. Thus, a projected aggregate saving rate of the Finnish economy will slightly increase during the next two decades.
    Keywords: population aging,household saving,age-cohor-period models,synthetic cohort
    JEL: E21 J11
    Date: 2022
  2. By: Javier Olivera; Yadiraah Iparraguirre
    Abstract: This article studies the gender gap in pension funds in Peru, a country where the main pension system is based on individual retirement accounts. We use randomly selected samples of individual administrative pension fund records, collected between 2005 and 2019. The results show a gender gap in favor of men at each percentile of the distribution of pension funds. The unconditional gender gap decreases along the percentiles until it reaches a form of “glass ceiling” around the 85th percentile, and then increases substantially. We also detect heterogeneity by birth cohorts, with older cohorts showing larger gender gaps in pension savings because of the capitalization process. Moreover, we find that awareness about pension fund risk management—used as a proxy for financial literacy—increases the dispersion of pension savings over the distribution, therefore increasing inequality and the gender gap. This situation is aggravated by the fact that Peru has very low levels of financial literacy.
    Keywords: gender gap; pension savings; financial literacy; unconditional quantile; Peru
    JEL: D31 G23 I11 I32
    Date: 2022–09
  3. By: Abhijit Banerjee; Esther Duflo; Erin Grela; Madeline McKelway; Frank Schilbach; Garima Sharma; Girija Vaidyanathan
    Abstract: The mental health of the elderly in low- and middle-income countries (LMICs) is a largely neglected subject, both by policy and research. We combine data from the health and retirement family of surveys in seven LMICs (plus the US) to document that depressive symptoms among those aged 55 and above are more prevalent in those countries and increase sharply with age. Depressive symptoms in one survey wave are associated with a greater decline in functional abilities and higher probability of death in the next wave. Using data from a panel survey we conducted in Tamil Nadu with a focus on elderly living alone, we document that social isolation, poverty, and health challenges are three of the leading correlates of depression. We discuss potential policy interventions in these three domains, including some results from our randomized control trials in the Tamil Nadu sample.
    JEL: I15 I3 O1
    Date: 2022–09
  4. 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 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: Public Pension; Public Education; Probabilistic Voting; Overlapping Generations
    JEL: D70 E62 H52 H55
    Date: 2022–09–10
  5. By: Mauro Mastrogiacomo; Yue Li; Rik Dillingh
    Abstract: We show heterogenous displacement effects of mandatory occupational pension savings on private household wealth for different groups. This contributes to explaining why empirical studies often come with different estimates of this effect. We study the case of the Netherlands, where wage employed and self-employed are differently exposed to compulsory pension savings, and the institutional setting provides exogenous variation in pension wealth that can be used as instrument in the analysis. We use rich administrative data on (pension) wealth and income combined for the first time to supervisory data of pension funds. Our results show a displacement effect of -31% for wage employed and of -61% for self-employed. The higher displacement effect we find for self-employed might be explained by the fact that self-employed are arguably more aware of their pension accrual, or lack thereof, because there is no employer who pays their pension premiums or adds an employer contribution.
    Keywords: Displacement effect; pension wealth; savings
    JEL: D14 H31
    Date: 2022–06
  6. By: Alison Preston (Business School, The University of Western Australia)
    Abstract: Using micro-data from the 2020 Household, Income and Labour Dynamics in Australia (HILDA) Survey for a large nationally representative sample of adults aged 18-64, this paper examines the factors associated with the early withdrawal of retirement savings as a result of the coronavirus. Logistic regressions show that early withdrawal behaviour was in response to financial needs with the likelihood of making a withdrawal higher amongst the young, those classified as financially fragile, precariously employed, the unemployed, lone parents with dependent children, persons experiencing poor health and those with poor financial literacy. The results raise questions about the design of early release schemes and the objectives of the Australian retirement income system, including equity outcomes in retirement. Policy suggestions are discussed, including a call for suitable data for monitoring purposes. It is too early to assess the long-term effects of recent behaviour under the ERS.
    Keywords: Retirement savings, early withdrawal, COVID-19, financial fragility, financial literacy, casual employment, gender
    Date: 2022
  7. By: Marie Claude Kamar; Riccardo Magnani
  8. By: Kotschy, Rainer (Harvard University); Sunde, Uwe (LMU Munich)
    Abstract: This paper presents new evidence on how demography affects democratic attitudes in Western democracies. Using individual survey responses, the empirical analysis disentangles age from cohort patterns and other contemporaneous economic and political influences that shape democratic attitudes. The results reveal that support for democracy increases with age and is lower for more recent birth cohorts. These patterns are more pronounced in Western democracies than in the former Eastern bloc and in other countries around the world. Additional findings document that demography's effect partly captures heterogeneity in experiences with democracy, and that socioeconomic factors impact democratic attitudes.
    Keywords: support for democracy; age-periods-cohort models; population aging; demographic composition; stability of democracy; modernization hypothesis;
    JEL: D72 O17 O43 P48
    Date: 2022–09–13

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