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on Economics of Ageing |
| By: | Cristina Bellés-Obrero; Sergi Jiménez-Martín; Han Ye |
| Abstract: | This paper sheds new light on the mortality effect of delaying retirement by investigating the impacts of the 1967 Spanish pension reform. This reform exogenously changed the early retirement age, depending on the date individuals started contributing to the Social Security system. Those contributing before 1 January 1967 maintained the right to voluntarily retire early (at age 60), while individuals who started contributing after that date could not voluntarily claim a pension until the age of 65. Using the Spanish administrative Social Security data, we find that the reform delayed the individuals’ labour market exit by around half a year and increased the probability that individuals take up disability pensions, partial pensions, and no pensions. We show evidence that delaying exiting employment increases the hazard of dying between the ages of 60 and 69, for almost all individuals. Heterogeneous analysis indicates that the increase in mortality is stronger for those employed in low-skilled, physically and psychosocially demanding jobs. Moreover, we show that allowing for flexible retirement schemes, such as partial retirement, mitigates the detrimental effect of delaying retirement on mortality. |
| Keywords: | Delaying retirement, Mortality, Heterogeneity, Flexible retirement |
| JEL: | I10 I12 J14 J26 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_410&r=age |
| By: | Sukontamarn, Pataporn (Chulalongkorn University); Asadullah, Niaz (Monash University); Photphisutthiphong, Nopphawan (Chulalongkorn University); Nguyen, Yen Thi Hai (Vienna Institute of Demography) |
| Abstract: | Family and intergenerational relationships are becoming increasingly important as sources of support and care for the elderly population in the rapidly aging Asian societies. However, this has also raised concern over the reinforcement of cultural preferences for sons as a source of old-age security. This paper, therefore, revisits the determinants of happiness in old age by investigating the role of adult children's gender in the context of Thailand, an aging Asian country with no legacy of sex preference in fertility. We employ nationally representative data to examine the association between old-age happiness and the presence of a coresiding child. Compared with living alone, living with at least one child is found to be positively associated with older persons' happiness. However, this result is specific to daughters. Moreover, compared with older men, older women systematically benefit from a "daughter effect." Coresiding daughters with a university education and those who maintain a good relationship with their parents help explain the positive happiness effect on older persons. Coresiding daughters are shown to increase the happiness of their parents through three channels: reducing loneliness, improving self-rated health, and improving the economic conditions of older parents. Overall, the findings of our study suggest a "daughter dividend, " or access to daughters, is key to enhancing parents' happiness in Thailand. Therefore, policies that increase the human capital of girl children and enhance family solidarity are likely to have long-term intergenerational wellbeing benefits. |
| Keywords: | older persons, aging, son preference, Southeast Asia, Thailand, subjective well-being |
| JEL: | D10 I31 J13 J14 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16073&r=age |
| By: | Cipriani, Giam Pietro (University of Verona); Fioroni, Tamara (University of Verona) |
| Abstract: | We study an OLG model with child policies and a PAYG pension with endogenous retirement and fertility. The result of the planned economy is compared to the decentralized competitive equilibrium deriving optimal policies. We show that in the presence of a PAYG pension system, the optimal policy mix includes an education subsidy and a subsidy for the supply of labor in old age. Fertility should be taxed or incentivized depending on whether there is full or partial retirement, and on the parameters. We focus on the parameter reflecting the deterioration of human capital and show that a child tax may be required. |
| Keywords: | PAYG pensions, endogenous fertility, endogenous retirement, social security, education subsidies, human capital |
| JEL: | J13 H2 H8 H55 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16029&r=age |
| By: | Chung Tran; Nabeeh Zakariyya |
| Abstract: | We examine the extent to which progressivity in the income tax and public pension systems could complement one another. We demonstrate that there is a negative relationship between optimal tax progressivity and pension progressivity. Shifting the social insurance and redistribution roles embedded in the progressive income tax code to a progressive pension system with stricter means-testing rules can yield better overall welfare outcomes. Flattening the income tax code (less tax progressivity) while tightening means-testing rules for pension payments (more pension progressivity) indeed results in larger welfare gains. The optimal design consists of a flat income tax rate and a strict means-tested pension scheme. Overall, redistributive concerns should be addressed directly through more progressive transfers; meanwhile, reducing tax progressivity is important for improving aggregate efficiency. |
| Keywords: | Taxation; age pension; tax progressivity; income dynamics; inequality; Suits index; heterogeneity; dynamic general equilibrium |
| JEL: | E62 H24 H31 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2023-691&r=age |
| By: | Edyta Marcinkiewicz; Filip Chybalski |
| Abstract: | This study contributes to the discussion about the housing-pensions nexus. However, it aims to explore housing in the context of welfare provision from a different perspective. Unlike the vast majority of the previous studies, we do not focus on homeownership per se or housing deprivation as a dimension of poverty, but on the significance of housing wealth. Additionally, the presented analysis is based on the more comprehensive concept of pension generosity assessment which includes empirical replacement rates. The study employs micro-data from the Luxembourg Wealth Study (LWS) dataset. Using statistical analysis and multinomial logistic regression modelling we examine housing wealth patterns among elderly households with a special focus on the possible linkage between housing and pension system’s generosity. The results of cross-country comparisons imply that there are large country differences in terms of housing wealth accumulation. Analyses of the relationship between (average) pension system generosity and the (average) share of housing assets in total assets at the country level using aggregated values do not provide any evidence for the pensions-housing trade-off. However, when the level of aggregation is reduced, a different picture emerges. Especially when the households having very small or no housing assets relative to total assets are excluded, it becomes clearer that individuals receiving higher pension tend to differentiate their asset portfolio. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:lis:lwswps:37&r=age |
| By: | Ricarda Duerst (Max Planck Institute for Demographic Research, Rostock, Germany); Jonas Schöley (Max Planck Institute for Demographic Research, Rostock, Germany); Christina Bohk-Ewald (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | Accurate mortality forecasts are essential for decision makers to plan for changing needs of pension and other social security systems. Researchers have developed a variety of methods with increasing methodological complexity to forecast mortality developments. We introduce a method validation workflow designed for mortality forecasts. The aim of our workflow is to assess the suitability of forecast method depending on the prevailing mortality regime in the country of interest. For our analysis, we apply our workflow to short-term Lee-Carter forecasts for 24 countries to showcase different mortality regimes. We assess Lee-Carter's forecast performance on the life expectancy and lifespan disparity at birth. We show that the mortality regime in the country of interest plays a crucial role for the performance of a forecast method. Thus, our method validation workflow helps researchers to choose an appropriate mortality forecast method. |
| Keywords: | forecasts, mortality |
| JEL: | J1 Z0 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2023-020&r=age |
| By: | Fabrice Murtin; Christopher Lübker |
| Abstract: | This study examines inequalities in life expectancy by educational status, age-standardised mortality rates, and age-at-death, using high-quality linked and supplementary unlinked data from 25 OECD countries in 2013-19. Absolute gaps in life expectancy at age 25 between high and low education groups are on average equal to 5.2 years and 8.2 years for women and men, respectively. Deaths of despair among women and men aged 25-64 contribute on average 7% and 11% to the total gap in life expectancy between high and low education groups, respectively. Comparing identical country-sources to the previous analysis, absolute gaps in life expectancy at age 25 have increased by 0.5 year and 0.4 year on average for women and men between 2011 and 2016. |
| Keywords: | death of despair, health inequality, life expectancy, longevity, socio-economic gradient |
| JEL: | I18 I14 |
| Date: | 2022–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:oec:wiseaa:8-en&r=age |
| By: | Angel de la Fuente |
| Abstract: | El presente informe resume las principales medidas recogidas en el RDL 2/2023 con el que en principio se cierra la actual reforma del sistema público de pensiones. Seguidamente, se analizan sus efectos sobre los ingresos y gastos del sistema hasta 2050, actualizando y mejorando los cálculos de urgencia realizados en informes recientes de FEDEA. El análisis confirma las conclusiones de nuestros cálculos preliminares: las medidas recogidas en el RDL generan, en el mejor de los casos, unos ahorros netos de magnitud modesta que ayudarán a mejorar la sostenibilidad del sistema público de pensiones – pero están muy lejos de las cuantías que serían necesarias para devolver el sistema al equilibrio tras la primera fase de la reforma. Esos ahorros, además, se reducen sustancialmente, hasta desaparecer en la parte final del período analizado, si se calculan con respecto a la normativa utilizada en el Ageing Report, que sería la referencia más apropiada de cara a las evaluaciones trienales que exige el nuevo MEI. En el informe se argumenta también que sería deseable aprovechar la tramitación del texto como proyecto de ley, al menos para eliminar ciertas imprecisiones en la redacción de la condición que activa el mecanismo de ajuste del MEI, e idealmente para reformular dicha condición en términos de un tope máximo al déficit básico del conjunto de la Seguridad Social esperado en promedio entre 2022 y 2050. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:eee2023-09&r=age |
| By: | Edyta Marcinkiewicz; Filip Chybalski |
| Abstract: | Our study contributes to the discussion about the extent of the phenomenon of the ‘income-poor, asset-rich’ elderly households, which can be associated with high homeownership rate in this group. However, we do not limit our analyses to this single category where low income is paired with high wealth, but rather explore the distribution of elderly households in terms of combinations of different levels of income and wealth. This way we shed some light on the existing patterns with reference to this distribution. This study focuses on the significance of homeownership and its impact on the welfare position of the elderly relative to the total population. We employ microdata from the Luxembourg Wealth Study Dataset (LWS) for 12 European countries. The results of the empirical research allow to draw some conclusions. First, ‘income-poor, asset-rich’ elderly households are a quite marginal category. Second, in the case of most countries studied, higher homeownership rates among elderly households, as compared to non-elderly households, are not accompanied by proportionally greater household wealth, even though the non-elderly are additionally burdened by the mortgage debt. However, we also find some evidence that homeownership is positively associated with the welfare position of the elderly. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:lis:lwswps:38&r=age |
| By: | Badilla Espinoza, Juan Manuel |
| Abstract: | Los sistemas de pensiones en América Latina, en particular aquellos en los que se implementaron procesos de reformas estructurales tendientes a la privatización de la seguridad social durante las décadas de 1980 y 1990, no han logrado cumplir con uno de sus principales objetivos: otorgar montos adecuados de pensiones. Esta situación no solo es relevante al evaluar los resultados de los sistemas de pensiones que incluyen esquemas de capitalización individual, sino que toma mayor relevancia cuando se analiza con una perspectiva a mediano y largo plazo en el marco de debates y procesos de reformas. En el presente documento, con el que se busca contribuir al debate regional sobre reformas a los sistemas de pensiones desde distintas dimensiones, se incluye una revisión del contexto histórico, un análisis de los argumentos que llevaron a la privatización de la seguridad social y sus limitaciones, una propuesta para el marco de análisis de los sistemas, incluida la experiencia comparada de procesos de reforma para la implementación de modelos mixtos contributivos, y elementos de especial interés en el debate actual, como el papel de la capitalización, la igualdad de género y las pensiones no contributivas en los sistemas. |
| Keywords: | SEGURIDAD SOCIAL, PENSIONES, REFORMA ADMINISTRATIVA, FONDOS DE PENSIONES, FORMACION DE CAPITAL, SOCIAL SECURITY, PENSIONS, ADMINISTRATIVE REFORM, PENSION FUNDS, CAPITAL FORMATION |
| Date: | 2023–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col022:48774&r=age |
| By: | Uchida, Yuki; Ono, Tetsuo |
| Abstract: | This study presents a political economy model with overlapping generations to analyze the effects of population aging on fiscal policy formation and the resulting distribution of the fiscal burden across generations. We show that population aging incentivizes the government to raise the capital and labor income tax rates as well as the ratio of public debt to GDP; this result is consistent with the cross-country evidence of OECD countries. We then undertake a model-based simulation over the period 2000-2070 for Japan and the United States and show that Japan is anticipated to face higher labor income tax rates, a greater public debt-to-GDP ratio, and a lower government expenditure-to-GDP ratio than the United States throughout the entire period. Moreover, starting form 2040, Japan is predicted to surpass the United States in terms of the capital tax rate. |
| Keywords: | Generational burden; Overlapping generations; Political economy; Population aging; Public debt |
| JEL: | D70 E24 E62 H60 |
| Date: | 2023–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113607&r=age |
| By: | Dalle, Axana (Ghent University); Sterkens, Philippe (Ghent University); Baert, Stijn (Ghent University) |
| Abstract: | Many OECD countries invest heavily in labour-market programs to prolong careers. Although active labour-market programs designed for this purpose have frequently been evaluated, less is known about the employment impact of more passive regimes that make labour-market participation later in life feasible. This study focuses on the latter by investigating the hiring opportunities of senior job candidates who partake in a system that ensures older labour-market participants a company supplement in addition to unemployment benefits when they are dismissed. Therefore, we conduct a state-of-the-art scenario experiment in which 360 genuine recruiters evaluate fictitious job candidates who have spent varying durations unemployed in regimes with and without the company supplement. Because they evaluate candidates with respect to both hireability and productivity perceptions, we can identify the mechanisms at play. Overall, we find no evidence of employer-side stigma hindering the re-employment of older unemployed in the program. On the contrary, the longer-term unemployed even benefit – in terms of hiring chances – from partaking in this regime because it seemingly mitigates the regular stigmatisation of long-term unemployment, especially for men. More concretely, recruiters judge the long-term unemployed more mildly, especially with respect to perceived flexibility, when they receive the company supplement and still apply. |
| Keywords: | hiring discrimination, signalling effect, income support, labour market program, vignettes |
| JEL: | J71 J32 J14 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16057&r=age |
| By: | Øystein Hernæs; Snorre Kverndokk; Simen Markussen; Henning Øien |
| Abstract: | The allocation of public care services should be determined by individual needs but can be influenced by economic factors. This paper examines the impact of economic incentives on the allocation of nursing home care in the Norwegian long-term care system. The study uses a theoretical model and empirical data from the municipality of Oslo to determine if nursing home spots are allocated based on income, which would be financially advantageous for the provider. We do not find evidence that the economic incentives of the care provider play a role in the allocation of nursing homes. Thus, in this setting, needs seems to be the dominant factor for allocation of nursing home care, while economic incentives seem to play no significant role. |
| Keywords: | long-term care, economic incentives in health care, health care equity |
| JEL: | I14 I18 H51 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10359&r=age |
| By: | Edyta Marcinkiewicz |
| Abstract: | This study contributes to the discussion about wealth inequality, albeit from a more detailed housing perspective. It explores tenure inequality, as well as housing assets inequality. The latter includes a different approach than the one that prevails in the previous literature on wealth inequalities, which most often considers total net worth or net housing wealth. This study focuses on gross housing asset distribution, irrespective of mortgage debt, which corresponds with the potential of housing equity accumulation as a source of income in old age. It emphasises the intergenerational context, but simultaneously involves cross-country comparisons that allow for relative assessment of the intergenerational differences. Drawing from the Luxembourg Wealth Study (LWS) database the paper presents the results for fourteen developed countries. They suggest that the current working-age generation is to a lesser extent involved into homeownership, as compared to the older generation, which results in a smaller housing equity per household, but simultaneously it experiences greater housing inequality. Furthermore, as shown in a cross-country perspective, homeownership rates and housing asset inequality are negatively correlated. Consequently, higher housing asset inequality by lower homeownership rates are the factors that undermine the usefulness of the asset-based welfare concepts in a policy application. Such findings imply that in the macro perspective the potential of housing as a source of additional income in cash and in kind tends to shrink. |
| JEL: | D63 G51 R21 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:lis:lwswps:41&r=age |
| By: | Filip Chybalski; Edyta Marcinkiewicz |
| Abstract: | We test whether the co-residence of older parents with their adult children at the reproductive age increases the chance of forming a multi-child family. Using data from Wave X of the Luxembourg Wealth Study (LWS) and multinomial logistic regression, we model the number of children using the binomial variable informing if there is an older household member (or not) as the main predictor and controlling for other socio-economic household attributes. Our data set covers 11 European countries. The results do not support the view that intergenerational households in which an elderly person lives include more children. Thus, the co-residence of two adult generations of parents-pensioners and their working-age children does not stimulate growth in the number of multi-child families. The results suggest that what matters for it is the gender equality policy facilitating solving of the motherhood-work conflict for families and women. |
| JEL: | J13 J12 H31 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:lis:lwswps:40&r=age |
| By: | Friedberg, Leora; Isaac, Elliott (Tulane University) |
| Abstract: | Recipiency of tax or transfer benefits in the United States often depends on marital status, creating complicated incentives that reward marriage for some and penalize it for others. Same-sex couples, who only recently gained the right to marry, now face the same marriage incentives that different-sex couples faced for decades. We highlight marriage incentives affecting older couples, who have rarely been studied. Using the American Community Survey, we estimate decreases in marriage among older, previously married women, which are consistent with remarriage disincentives from Social Security and marriage disincentives from Medicaid that are more salient for women. |
| Keywords: | marriage, Social Security, Medicaid, same-sex marriage |
| JEL: | J12 H55 I13 J16 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16022&r=age |