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on Economics of Ageing |
| By: | Franca Glenzer; Pierre-Carl Michaud; Stefan Staubli |
| Abstract: | Many near-retirees forgo a higher stream of public pension income by claiming early. We provide both quasi-experimental and survey-experimental evidence that the timing of public pension claiming is relatively inelastic to changes in financial incentives in Canada. Using the survey experiment, we evaluate the effect of two different educational interventions and different ways of framing the incentive to delay claiming. While all three types of interventions induce delays, these interventions have heterogeneous financial consequences for participants who react. De nombreux individus approchant de la retraite renoncent à un un flux plus élevé de revenu de pensions publiques en demandant ces dernières de manière anticipée. Nos analyses de type quasi-expérimentale et de type enquête-expérimentale montrent que, au Canada, le moment auquel les individus demandent leur pension du RPC / RRQ est relativement inélastique aux changements dans les incitations financières. Dans la portion utilisant une expérience par enquête, nous évaluons l'effet de deux interventions éducationnelles et de manières variables de présenter l’information concernant l’incitation au report de la demande de pension. Bien que les trois types d'interventions induisent des reports, elles ont des conséquences financières hétérogènes parmi les participants qui y réagissent. |
| Keywords: | Pension Claiming, Annuities, Retirement, Financial Education, Framing, Demande de pension, rentes, retraite, éducation financière, encadrement |
| JEL: | D91 H55 J14 J26 |
| Date: | 2023–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2023s-05&r=age |
| By: | Moghadam, Hamed Markazi (Leibniz Univeristät Hannover); Puhani, Patrick A. (Leibniz University of Hannover); Tyrowicz, Joanna (University of Warsaw) |
| Abstract: | To determine how wives' and husbands' retirement options affect their spouses' (and their own) labour supply decisions, we exploit (early) retirement cutoffs by way of a regression discontinuity design. Several German pension reforms since the early 1990s have gradually raised women's retirement age from 60 to 65, but also increased ages for several early retirement pathways affecting both sexes. We use German Socio-Economic Panel data for a sample of couples aged 50 to 69 whose retirement eligibility occurred (i) prior to the reforms, (ii) during the transition years, and (iii) after the major set of reforms. We find that, prior to the reforms, when several retirement options were available to both husbands and wives, both react almost symmetrically to their spouse reaching an early retirement age, that is both husband and wife decrease their labour supply by about 5 percentage points when the spouse reaches age 60). This speaks in favour of leisure complementarities. However, after the set of reforms, when retiring early was much more difficult, we find no more significant labour supply reaction to the spouse reaching a retirement age, whereas reaching one's own retirement age still triggers a significant reaction in labour supply. Our results may explain some of the diverse findings in the literature on asymmetric reactions between husbands and wives to their spouse reaching a retirement age: such reactions may in large parts depend on how flexibly workers are able to retire. |
| Keywords: | retirement coordination, labour market participation, household decisions, regression discontinuity design |
| JEL: | J22 J26 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16039&r=age |
| By: | Katja M. Kaufmann; Yasemin Özdemir; Han Ye |
| Abstract: | We study the impact of grandparental retirement decisions on family members’ labor supply and child outcomes by exploiting a Dutch pension reform in a fuzzy Regression Discontinuity design. A one-hour increase in grandmothers’ hours worked causes adult daughters with young children to work half an hour less. Daughters without children, with older children and sons/daughters-in-law are not affected. We show important long-run impacts on maternal labor supply and on the child penalty. Test score effects are positive for children aged 4-7 (substitution from grandparental to maternal care), and negative for children aged 11-12 (substitution from grandparental to formal childcare). |
| Keywords: | spillover effects, retirement, grandparental childcare, maternal labor supply, child development |
| JEL: | J13 J22 J26 I38 D64 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_403&r=age |
| By: | Pierre-Carl Michaud (HEC Montreal); Pascal St-Amour (University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Swiss Finance Institute) |
| Abstract: | Annuities, long-term care insurance and reverse mortgages remain unpopular to manage longevity, medical and housing price risks after retirement. We analyze low demand using a life-cycle model structurally estimated with a unique stated-preference survey experiment of Canadian households. Low risk aversion, substitution between housing and consumption and low marginal utility when in poor health explain most of the reduced demand. Bequests motives are found to be a luxury good and play a limited role. The remaining disinterest is explained by information frictions and behavioural status-quo biases. We find evidence of strong spousal co-insurance motives motivating LTCI and of responsiveness to bundling with a near doubling of demand for annuities when reverse mortgages can be used to annuitize, instead of consuming home equity. |
| Keywords: | retirement wealth, insurance, health risk, housing risk |
| JEL: | J14 G52 G53 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2318&r=age |
| By: | Francesco Caloia; Mauro Mastrogiacomo; Irene Simonetti |
| Abstract: | This paper studies the saving response of households to shocks in the capital position of their pension fund. Using survey panel data matched to supervisory data of Dutch occupational pension funds for a period that involved three major economic crises, we provide evidence of an increase in savings driven by a worsening of the financial position of pension funds. The identification strategy exploits cross-sectional and time variations in the funding ratios of pension funds. These variations are exogenous shocks to the pension wealth of pension fund members as these result from asset price adjustments and asset allocations over which members have no direct control. We show significant saving responses to general changes in the funding ratios, as well as to direct shocks to pension funds such as in the event of a funding deficit or a stop to conditional indexation. The change in savings is especially seen among workers who participate in pension funds with historically lower returns. |
| Keywords: | D14; G51; H55 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:775&r=age |
| By: | Laurence O'Brien (Institute for Fiscal Studies) |
| Date: | 2023–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:23/10&r=age |
| By: | Irene Ferrari (Department of Economics, University Of Venice CÃ Foscari; Netspar); Jan Kabátek (University of Melbourne, Life Course Centre, IZA; Netspar); Todd Morris (HEC Montreal, Life Course Centre, CEPAR; Netspar) |
| Abstract: | Government policies are encouraging older workers to delay retirement, which may curb younger workers' career advancement. We study a Dutch reform that raised the retirement age by 13 months and nearly tripled employment at age 66. Using monthly linked employer-employee data, we show that affected firms delay and decrease replacement hiring, and coworkers' earnings fall via reductions in hours worked, wages, and promotions. Combined, the hiring and coworker spillovers offset most of the additional hours worked by older workers, disproportionately affect career advancement for younger workers and women, and considerably increase the policy's ratio of welfare costs to fiscal savings. |
| Keywords: | retirement reform, labor demand, internal labor markets, firms, coworker spillovers |
| JEL: | H55 J23 J26 J63 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2023:06&r=age |
| By: | Anqi Chen; Siyan Liu; Alicia H. Munnell |
| Abstract: | In early 2020, the COVID Recession seemed like it would result in an increase in early Social Security claiming, similar to the Great Recession. However, pretty quickly the COVID Recession turned out to be quite different. It was spurred by a health crisis, potentially increasing the likelihood of early claiming among older workers and accompanied by a quick recovery in the stock market followed by rapidly-rising prices that could enable many with assets to retire early. On the other hand, the unprecedented expansion and generosity of unemployment insurance (UI) offered a way for lower-paid workers to stay in the labor force. The following analysis, using data from the Health and Retirement Study (HRS), compares how the claiming pattern changed in the recession years 2008-2010 from the expansion years 2004-2006 with how the pattern changed in the recession year 2020 from the expansion years 2016-2018. |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2022-12&r=age |
| By: | Natee Amornsiripanitch |
| Abstract: | As the U.S. population ages and lifespans increase, it is important to understand how aging affects an individual’s ability to access credit. Older homeowners tend to have more financial resources and better credit scores than their younger counterparts, so one would expect that they could borrow more easily. But is that true? This brief, which is based on a recent paper, is the first of a two-part series that looks at the relationship between age and mortgage outcomes. This initial brief uses confidential Home Mortgage Disclosure Act (HMDA) data to study the relationship between age and the probability of being denied a mortgage application. The second brief will examine the relationship between age and the interest rate charged on mortgages. The discussion proceeds as follows. The first section briefly outlines the extent to which a borrower’s age can legally be considered in credit decisions. The second section describes the data, which focus on rate-and-term refinance mortgages for single applicants, and the methodology, which relates the probability of rejection to age and a host of control variables. The third section presents the results, which show that rejection rates rise consistently with age. And the magnitude is large; applications for the three oldest age groups are 1-3 percentage points more likely to be rejected than those of younger applicants. These numbers equal or exceed the marginal rejection rates for Black and Hispanic applicants. The fourth section offers some possible reasons for this relationship: the underwriters frequently cite “insufficient collateral, †but the underlying issue may be mortality risk, which is tightly associated with prepayment, default, and recovery risks. The final section concludes that while the relationship between age and rejection is large and robust, it does not necessarily indicate that lenders are violating fair lending legislation. First, the regulations allow lenders to consider borrower’s age under some circumstances. Second, although the equation controls for many observable characteristics, the results should be viewed as an association between age and rejection – not a causal relationship. Third, mortality risk has real economic implications for lenders for which they might require additional collateral. Regardless of the reason, however, it is important for older individuals to know that they are more likely to be denied credit. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2023-04&r=age |
| By: | Richard Blundell (Institute for Fiscal Studies); Margherita Borella (Institute for Fiscal Studies); Mariacristina De Nardi (Institute for Fiscal Studies); Jeanne Commault (Sciences Po) |
| Date: | 2023–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:23/12&r=age |
| By: | Andrew Glover; Jacob Short |
| Abstract: | Since 1980, the earnings share of older workers has risen in the United States. At the same time, labor’s share of income has declined significantly. We hypothesize that an aging workforce has contributed to the decline in labor’s share of income. We formalize this hypothesis in an on-the-job search model in which employers of older workers may have substantial monopsony power due to the decline in labor market dynamism that accompanies aging. The greater monopsony power manifests as a growing wedge between a worker’s earnings and their marginal product over the life cycle. We estimate the profile of these wedges using cross-industry variation in labor’s share and the age distribution of earnings. We find that a 60-year-old worker receives half the marginal product relative to when they were 20. Together with recent demographic trends, this can account for 59% of the recent decline in labor’s share of earnings in the United States. |
| Keywords: | Labour markets; Productivity |
| JEL: | D33 E25 J1 J3 J62 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-20&r=age |
| By: | Liu, Weifeng Larry |
| Abstract: | This paper explores the impacts of demographic change on national saving and international capital flows. Introducing demographic structure and pension systems into a four-stage overlapping-generation model of a small open economy, the paper derives analytical solutions which link a wide range of factors to national saving and the current account. This framework enables tractable analysis of the effects of various demographic shocks on national saving and external balances, and also of the interaction between demographic shocks and productivity growth and pension systems. The demographic impacts on national saving and capital flows depend on the nature of demographic shocks (fertility or mortality; transitory, permanent or persistent) and on the stage of demographic shocks, as well as productivity growth and pension structure. |
| Keywords: | International Relations/Trade, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333413&r=age |
| By: | Barbara A. Butrica; Stipica Mudrazija |
| Abstract: | This paper explores whether the evolving nature of work has impacted the relationship between health and work-related disability and disability applications through its impact on job demands. Using data from the Health and Retirement Study, supplemented with data on job demands from the Occupational Requirement Survey and Occupational Information Network, we document trends in the association of health and functioning with the risk of experiencing a work-limiting health event and applying for or receiving disability benefits, and assess whether the changing composition of jobs and job demands impacts the strength of this relationship. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2022-18&r=age |
| By: | Trahms, Annette (Institute for Employment Research (IAB), Nuremberg, Germany); Vicari, Basha (Institute for Employment Research (IAB), Nuremberg, Germany); Westermeier, Christian (IAB) |
| Abstract: | "The Covid 19-pandemic hit people over 60 years of age multiple times. On the one hand, because of their higher risk for a severe course of infection. On the other hand, the decline in the firm labor demand as a result of contact restrictions had a particular impact on atypical employment: This also includes mini-jobs, which are a frequent form of employment, especially for older employees and pension recipients. Using data from the IAB, the authors examine pandemic-related changes in various employment and living situations of 60- to 70-year-old workers." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | IAB-Open-Access-Publikation |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabkbe:20237&r=age |
| By: | Ismael Choinière-Crèvecoeur; Pierre-Carl Michaud |
| Abstract: | Few retirees use reverse mortgages. In this paper, we investigate how financial literacy and prior knowledge of the product influence take-up by conducting a stated-preference experiment. We exogenously manipulate characteristics of reverse mortgages to tease out how consumers value them and investigate differences by financial literacy and prior knowledge of reverse mortgages. We find that those with higher financial knowledge are more likely to know about reverse mortgages, not more likely to purchase them at any cost but are more sensitive to the interest rate and the insurance value of these products in terms of the non-negative equity guarantee. Peu de retraités ont recours aux prêts hypothécaires inversés. Dans cet article, nous étudions l'influence de la littératie financière et de la connaissance préalable du produit sur son utilisation en menant une expérience de préférences déclarées. Nous manipulons de manière exogène les caractéristiques des prêts hypothécaires inversés afin de déterminer la valeur que leur accordent les consommateurs et d'étudier les différences en fonction de la littératie financière et de la connaissance préalable des prêts hypothécaires inversés. Nous constatons que les personnes ayant de meilleures connaissances financières sont plus susceptibles de connaître les prêts hypothécaires inversés; qu'elles ne sont pas plus susceptibles de les acheter à tout prix; mais qu'elles sont plus sensibles au taux d'intérêt et à la valeur d'assurance de ces produits en termes de garantie de valeur nette réelle non négative. |
| Keywords: | reverse mortgages, savings, retirement planning, insurance, hypothèques inversées, épargne, planification de la retraite, assurance |
| JEL: | G53 G21 R21 |
| Date: | 2023–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2023s-06&r=age |
| By: | Miguel Ángel García Díaz |
| Abstract: | En este trabajo se pasa revista a las principales medidas adoptadas como parte de la reciente reforma del sistema público de pensiones, así como a algunas proyecciones de sus efectos presupuestarios. Se concluye con algunas reflexiones sobre las perspectivas de futuro del sistema. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:eee2023-08&r=age |
| By: | Karolos Arapakis; Gal Wettstein |
| Abstract: | Since 1965, academics have argued that individuals should annuitize a large part of their wealth. However, for nearly as long, studies have documented that annuitization rates fall far short of what seem to be optimal levels. Researchers have proposed multiple explanations for this potentially sub-optimal outcome. This brief, based on a recent study, assesses the relative importance of two explanations of this outcome, called the annuity puzzle. The first explanation is that annuity prices are set to compensate insurers for the higher average life expectancy of those who voluntarily purchase annuities, thereby making the product less attractive to potential consumers. The second explanation is that individuals in their 50s and 60s subjectively underestimate their life expectancy, which makes them perceive annuities as less attractive. The discussion proceeds as follows. The first section provides a brief background. The second section describes the data and methodology. The third section presents the results: a one-year decrease in objective life expectancy is associated with a 0.20-percentage-point reduction in the chance of receiving income from a commercial annuity, which is nearly nine times larger than the association with an individual subjectively believing that he will live for one year less. The final section concludes that better understanding what drives annuitization is important for annuity providers and policymakers alike. If irrational subjective mortality pessimism were driving low annuitization rates, better informing the public about mortality rates could have reduced the problem. Given that objective life expectancy is the more important factor, a larger public role in the provision of annuities could be considered. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2023-03&r=age |
| By: | Miguel Ángel García Díaz |
| Abstract: | La AIReF (2023) ha publicado la “Opinión sobre la sostenibilidad de las administraciones públicas a largo plazo: la incidencia de la demografía” con el fin de analizar el impacto de la demografía sobre las cuentas públicas a partir de un escenario macroeconómico y fiscal que se elabora con un horizonte temporal hasta 2050 y 2070. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdafen:2023-09&r=age |
| By: | Sergio Clavijo |
| Abstract: | Este documento analiza las implicaciones de las reformas pensional y laboral radicadas recientemente por la Administración Petro (2022-2026). Ellas apuntan a establecer un cuasi-monopolio público bajo un sistema de "reparto simple" (Colpensiones), al tiempo que se vuelve más costosa la contratación laboral en horas nocturnas, dominicales y los despidos. Aquí presentamos métricas de informalidad laboral (cercanas al 85% según el PILA), las cuales ilustran la baja probabilidad de lograrse los tiempos mínimos de cotización (sector público) y/o de montos ahorrados (sector privado) requeridos para acceder a una renta vitalicia. También cuantificamos el esfuerzo fiscal requerido para llegar a sustituir por partidas presupuestales los elevados costos no-salariales empresariales, bordeando actualmente el 51% sobre la nómina. Por último, pasamos revista a las alternativas de subsidios permanentes ("renta universal"), temporales (BEPs) y concluimos que la única manera de tenerse soluciones estructuralmente sostenibles, desde la óptica fiscal y laboral, consiste en apuntalar esfuerzos pro-ahorro y formalidad laboral, dejando como complementarios los programas de apoyos asistenciales. |
| Keywords: | Seguridad Social, Política Pública, Pensiones, LatinoAmérica |
| JEL: | H55 I38 J26 O54 |
| Date: | 2023–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:020696&r=age |
| By: | Uta Bolt (Institute for Fiscal Studies); Eric French (Institute for Fiscal Studies); Jamie Hentall-MacCuish (Institute for Fiscal Studies); Cormac O'Dea (Institute for Fiscal Studies) |
| Date: | 2023–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:23/11&r=age |
| By: | Karolos Arapakis; Gal Wettstein |
| Abstract: | Objective life expectancy and subjective survival pessimism (defined as the difference between objective and subjective life expectancy) may both affect the demand for annuities. The question this project answers is: how do these two explanations contribute to annuitization decisions in practice? To explore this question, the analysis estimates regression models that include objective life expectancy, subjective survival pessimism, and other characteristics that are linked to annuitization decisions. The results show that, as one would expect, individuals with higher objective life expectancy are more likely to buy an annuity. Similarly, less pessimistic individuals are also more likely to buy an annuity. A one-year rise in objective life expectancy increases the probability of buying an annuity product by 0.20 percentage points, which is nearly nine times larger than a one-year decline in pessimism. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2023-02&r=age |