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on Economics of Ageing |
| By: | Mathias Dolls; Carla Krolage |
| Abstract: | This paper analyzes behavioral responses to a 2014 reform in the German public pension system that lowered the full retirement age (FRA) of individuals with a long contribution history by up to two years and framed the new FRA as reference age for retirement. Using administrative data from public pension insurance accounts, we first document a substantial bunching response at the FRA exceeding the control group’s bunching by 83%. Second, we show in a difference-in-difference setting that a 1.0 year decrease in the FRA leads to a reduction in the average pension claiming age by 0.3-0.4 years. Treated individuals neither have poorer health nor are more likely to be liquidity-constrained than individuals in the control group. Our results suggest that the strong responses to the reform are driven both by the new FRA serving as a reference point and by financial incentives. Estimated fiscal costs of the reform are at the upper end of the range of previous back-of-the-envelope calculations. |
| Keywords: | retirement age, early retirement, pension reform |
| JEL: | H55 J14 J18 J26 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10420&r=age |
| By: | Hamed Moghadam (Leibniz Universit¨at Hannover); Patrick Puhani (Leibniz Universit¨at Hannover); Joanna Tyrowicz (University of Warsaw, Poland) |
| 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: | J22, J26 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2309&r=age |
| By: | Su Yeon Jang (Max Planck Institute for Demographic Research, Rostock, Germany); Anna Oksuzyan (Max Planck Institute for Demographic Research, Rostock, Germany); Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Frank J. van Lenthe; Silvia Loi (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | Immigrants face a particularly high risk of unhealthy ageing. It is well-known that the probability of having multiple chronic conditions simultaneously, or multimorbidity, tends to increase with age. This study investigates the immigrant-native disparities in age-related health decline, focusing on the number of chronic health conditions; and considers the heterogeneity of this decline within immigrant populations by origin and receiving country. We use data from the Survey of Health, Ageing and Retirement in Europe on adults aged 50 to 79 from 28 European countries, and employ fixed-effects regression models to account for the unobserved heterogeneity related to individual characteristics, including migration background. Our results indicate that immigrants have a higher number of chronic conditions at all ages relative to their native-born peers, but also that the immigrant-native differential in the number of chronic conditions decreases from age 65 onwards. When considering differences by origin country, we find that the speed of chronic disease accumulation is slower among immigrants from the Americas and the Asia and Oceania country groups than it among natives. When looking at differences by receiving country group, we observe that the speed of health decline is slower among immigrants in Eastern Europe than among natives, particularly at older ages. Our findings suggest that age-related trajectories of health vary substantially among immigrant populations by origin and destination country, which underscore that individual migration histories play a persistent role in shaping the health of ageing immigrant populations throughout the life course. |
| JEL: | J1 Z0 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2023-024&r=age |
| By: | Sebastian Graves; Victoria Gregory; Lars Ljungqvist; Thomas J. Sargent |
| Abstract: | We incorporate time-averaging into the canonical model of Heckman, Lochner, and Taber (1998) (HLT) to study retirement decisions, government policies, and their interaction with the aggregate labor supply elasticity. The HLT model forced all agents to retire at age 65, while our model allows them to choose career lengths. A benchmark social security system puts all of our workers at corner solutions of their career-length choice problems and lets our model reproduce HLT model outcomes. But alternative tax and social security arrangements dislodge some agents from those corners, bringing associated changes in equilibrium prices and human capital accumulation decisions. A reform that links social security benefits to age but not to employment status eliminates the implicit tax on working beyond 65. High taxes with revenues returned lump-sum keep agents off corner solutions, raising the aggregate labor supply elasticity and threatening to bring about a “dual labor market” in which many people decide not to supply labor. |
| Keywords: | time averaging; labor supply elasticity; retirement; taxation; Laffer curve; social security reform |
| JEL: | E24 E60 J22 J26 |
| Date: | 2023–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:96238&r=age |
| By: | Bertrand Achou; Philippe De Donder; Franca Glenzer; Minjoon Lee; Marie-Louise Leroux |
| Abstract: | Marginal utility of financial resources when needing long-term care, and the related incentives for precautionary savings and insurance, may vary significantly by whether one receives care at home or in a nursing home. In this paper, we develop strategic survey questions to estimate those differences. All else equal, we find that the marginal utility is significantly higher when receiving care at home rather than in a nursing home. We then use these estimates within a quantitative life cycle model to evaluate the impact of the expected choice of care setting (home versus nursing home) on precautionary savings and insurance valuation. The estimated marginal utility differences imply a significant increase in the incentives to save when expecting to receive care at home. Larger incentives to self-insure also translate to a higher valuation of additional subsidies for home care than for nursing homes, shedding light on an efficient way to expand public long-term care subsidies. We also examine how the magnitude of our results quantitatively vary with the existing public long-term care subsidies. |
| Keywords: | Long-term Care, Marginal Utility, Home Care, Nursing Home, Savings. |
| JEL: | D14 E21 G51 I10 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:rsi:creeic:2303&r=age |
| By: | Joan Costa-Font; Sergi Jiménez; Cristina Vilaplana Prieto; Analía Viola |
| Abstract: | Spain together with Scotland are two countries that exhibit the largest expansions in long term care (LTC) in the last two decades, universalizing subsidies and supports. This paper is part of a global effort to provide a snapshot of the trends in LTC use and access, as well as the financing, and organization of the LTC system compared to other higher-income countries. After the passage of Act 39/2006 on the Promotion of Personal Autonomy and Care for Dependent Persons (SAAD in Spanish) on December 14, 2006, which universalized coverage for care subsidies and supports, access to care solely depends on individuals’ assessment of care needs, which has expanded the use of care, and spending as a percentage of GDP (which has risen from 0.5% in 2003 to nearly 0.9% in 2019), despite private LTC insurance playing a minor role. Still today, LTC remains heavily reliant on informal care, which is now partially subsidized by a caregiving subsidy as part of SAAD, which has expanded the weekly hours of publicly funded support for personal home help have increased significantly. Finally, the system reveals significant gender imbalances in the provision of care, with women accounting for most caregivers in both formal (87%) and informal (58%) care. Unas reformas muy decepcionantes |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:eee2023-19&r=age |
| By: | François Facchini (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | L'impôt sur l"héritage est un impôt sur le transfert de la fortune au moment de la mort du contribuable (taxes on transfers of wealth). Il s'agit d'un impôt sur la richesse du défunt. La succession imposable est égale à la valeur des actifs détenus par le contribuable au moment du décès, moins les legs au conjoint exonéré, les sommes qui font l'objet d'abattement et d'exonération, les dettes, les contributions à des organismes de bienfaisance, les frais funéraires et le coût de l'administration de la succession. Il est au cœur d'une importante actualité. Cet article se propose d'en résumer l'essentiel. Il focalise l'attention sur le biais égalitariste qui entoure l'ensemble des débats contemporains sur la taxation sur l'héritage dans une première section. Il rappelle à la suite de Robert Nozick (1974) qu'inégalité et injustice ne sont pas synonymes et que multiplier les statistiques sur les inégalités ne dit rien sur la justice ou l'injustice d'un ordre économique. Il présente dans une troisième section la littérature sur l'efficience de ce type d'impôt et constate que l'impôt sur l'héritage a plutôt un effet négatif sur l'épargne et la croissance de long terme d'un pays. Si l'impôt sur l'héritage n'est ni juste ni efficient, il devrait donc être aboli comme dans de nombreux pays. Cela répondrait aux attentes de l'opinion publique en la matière. |
| Keywords: | impôt sur l'héritage, justice, inégalités, efficience, libéralisme |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04096998&r=age |