nep-age New Economics Papers
on Economics of Ageing
Issue of 2024‒04‒08
twenty-six papers chosen by
Claudia Villosio, LABORatorio R. Revelli

  1. Calculating the Redistributive Impact of Pension Systems in LAC By Altamirano Montoya, Álvaro; Oliveri, María Laura; Bosch, Mariano; Tapia Troncoso, Waldo
  2. Live Longer and Healthier: Impact of Pension Income for Low-Income Retirees By Chiara Malavasi; Han Ye
  3. Work and Retirement of Older Black and Hispanic Adults By Emma Aguila; Zeewan Lee
  4. Assessing the First Economic Impact Payment in the Older Population Using the Health and Retirement Study By Gábor Kézdi; David R. Weir
  5. The effects of social pensions on mortality among the extreme poor elderly By Jose A. Valderrama; Javier Olivera
  6. How Much Do Public Employees Value Defined Benefit versus Defined Contribution Retirement Benefits? By Giesecke, Oliver; Rauh, Joshua
  7. The Dynamic Effects of Health on the Employment of Older Workers: Impacts by Gender, Country, and Race By Richard Blundell; Jack Britton; Monica Costa Dias; Eric French; Weijian Zou
  8. The Role of Physical, Cognitive, and Interpersonal Occupational Requirements and Working Conditions on Disability and Retirement By Italo Lopez Garcia; Kathleen J. Mullen; Jeffrey B. Wenger
  9. Retirement Pensions and Disability Insurance for the 21st Century By Tom Zawisza
  10. Pensions soutenables By Hindriks, Jean
  11. Job Demands and Social Security Disability Insurance Applications By Charles Brown; John Bound; Chichun Fang
  12. Oportunidades y opciones para la creación de un sistema de pensiones no contributivo en Honduras By Delgado Chavarría, Manuel
  13. The Impacts of the Social Security Statement Redesign on People’s Knowledge and Behavioral Intentions: A Survey Experiment By Francisco Perez-Arce; Lila Rabinovich
  14. Risk of Large Medical Expenditures at Older Ages and Their Impact on Economic Well-being By Susann Rohwedder; Péter Hudomiet; Michael D. Hurd
  15. Income Receipt, Economic Activities, and Health: Evidence from Ambulance Transport Patterns By Yoko Ibuka; Junya Hamaaki
  16. The Incidence of Workplace Pensions: Evidence from the UK's Automatic Enrollment Mandate By Rachel Scarfe; Daniel Schaefer; Thomas Sulka
  17. Using Administrative Data to Validate HRS Survey Responses on Application for DI and SSI Disability Benefits By John Bound; Charles Brown; Chichun Fang
  18. Botswana: Financial Sector Assessment Program-Technical Note on Stress Testing and Systemic Risk Analysis for Insurers and Retirement Funds By International Monetary Fund
  19. Racial and Ethnic Disparities in Knowledge about Social Security Programs By David Knapp; Francisco Perez-Arce
  20. Traditional and Nontraditional Earnings: Demographic, Financial, and Beneficiary Patterns By Kathryn Anne Edwards; Daniel Schwam
  21. Gendered Impacts of COVID-19 on Economic and Retirement Security By María J. Prados; Jeremy Burke
  22. When should retirees tap their home equity? By Hambel, Christoph; Kraft, Holger; Meyer-Wehmann, André
  23. Labor Market Adjustments to Population Decline: A Historical Macroeconomic Perspective, 1875-2019 By Hellwagner, Timon; Weber, Enzo
  24. How Does Social Security Affect the Racial Wealth Gap? By John Sabelhaus
  25. The Alignment of Household Preferences and Financial Decisions Leading up to Retirement By Leandro Carvalho; Arna Olafsson; Dan Silverman
  26. Disparities in Social Security Knowledge and the Role of Social Capital By Katherine Carman; Samer Atshan; Jhacova Williams

  1. By: Altamirano Montoya, Álvaro; Oliveri, María Laura; Bosch, Mariano; Tapia Troncoso, Waldo
    Abstract: This paper examines the implicit subsidies within pension systems across Latin America and the Caribbean (LAC) region. We first calculate the theoretical benefits of pension for hypothetical workers in 25 countries in LAC. We show that, on average, LAC's pension systems are subsidized, as they provide pensions above what workers would have obtained by investing pension contributions in a safe asset. Similarly, pension systems are designed to be progressive by offering higher replacement rates (pensions relative to earnings) for low-income workers. Despite this progressivity, in some countries, absolute subsidies could be higher for high-income workers. This occurs because the cost of one percentage point of the replacement increases with the average pension. Second, using data from social protection surveys, we estimate the incidence of pension systems in five LAC countries. We show that, on average, all five systems provide important subsidies to those workers who obtain a pension. However, given the high levels of informal work, in some countries, those subsidies are highly concentrated among high-income workers. Variation is large across countries. The three highest labor income deciles concentrate 70-95% of all subsidies in defined benefit systems such as Paraguay and Colombia. In defined contribution systems, subsidies are much more progressive, but still, because low-income workers do not qualify for minimum pensions, between 50-60% of subsidies concentrate in the high-income deciles. Countries like Chile, with explicit subsidies targeted at the bottom of the income distribution, obtain a more progressive distribution of subsidies. Because of relatively low participation rates, women have a weaker link with the pension system. They are also less likely to benefit from implicit subsidies. Finally, we show that non-contributory pensions, if well-targeted, largely improve the redistributive properties of pension systems in LAC.
    Keywords: pensions;subsidies;taxes;Latin America
    JEL: H55 J11 J14 J18 J26 J32
    Date: 2023–10
  2. By: Chiara Malavasi; Han Ye
    Abstract: We estimate the effect of additional pension income on mortality outcomes by exploring the eligibility criteria of a German program subsidizing the pensions of low-wage workers. Using novel administrative data, we find that eligibility leads to a 2-month delay in age at death (censored at 75). Survey evidence suggests that additional pension income improves both mental and physical health. In addition, individuals feel less financially constrained and are more optimistic about their future. Heterogeneity analysis indicates that the results are mainly driven by men.
    Keywords: Mortality, Health, Income, Pension subsidy, Retirement
    JEL: I10 I12 J14 J26
    Date: 2024–03
  3. By: Emma Aguila (University of Southern California); Zeewan Lee (University of Southern California)
    Abstract: Growing U.S. income inequality and the aging of Black and Hispanic populations point to greater risks of financial insecurity for older populations in coming years. Research on retirement determinants for Blacks and Hispanics is limited. Using data from the Health and Retirement Study, we analyze retirement determinants for Blacks and Hispanics. We link this data to the Working Trajectories file and restricted SSA individual-level files to determine Social Security wealth by race and ethnic origin. Using sociodemographic, health, and economic covariates, we construct a conditional probit model that identifies the probability a given individual will retire from the workforce over time. We find that Hispanics, Blacks, and non-Hispanic whites respond similarly to Social Security, private pension incentives, and other institutional (e.g., health insurance) influences on retirement. In their retirement decisions, non-Hispanic Blacks are not responsive to some sociodemographic characteristics (male, couple, and number of household members), but they are responsive to physical and mental health problems. Hispanics are less responsive than non-Hispanic whites to most sociodemographic characteristics (male, education, and couple) and mental health problems in their retirement decisions. Our findings for non-Hispanic whites are consistent with previous literature. Our research can inform programs and policies to improve the quality of life for older adults, especially those isolated by cultural, economic, educational, or other barriers.
    Date: 2022–09
  4. By: Gábor Kézdi (Survey Research Center, University of Michigan); David R. Weir (Survey Research Center, University of Michigan)
    Abstract: We use data collected by the Health and Retirement Study in its 2020 wave to study awareness and impact of the Economic Impact Payment stimulus on different groups of older Americans during the coronavirus pandemic.
    Date: 2023–01
  5. By: Jose A. Valderrama (Departamento de Economía de la Pontificia Universidad Católica del Perú.); Javier Olivera (Departamento de Economía de la Pontificia Universidad Católica del Perú, Luxembourg Institute of Socio-Economic Research (LISER).)
    Abstract: We study the effects of Peru’s social pension programme Pension 65 on mortality. The programme provides pensions to people aged 65 and older who do not have other pensions and are extreme poor. The analysis relies on survey data obtained at the baseline and matched to mortality records of 2012-2019. We exploit the discontinuity around the welfare index used by the programme to determine eligibility, and estimate intention-totreat effects. We find that after seven years, the programme could reduce mortality among eligible people by about 11.4 percentage points, implying about one year more in life expectancy. JEL Classification-JE: H55, I38, J14.
    Keywords: Mortality, non-contributory pensions, Poverty, regression discontinuity.
    Date: 2023
  6. By: Giesecke, Oliver (Hoover Institution, Stanford U); Rauh, Joshua (Stanford U)
    Abstract: We survey public employees across the United States about their preferences regarding retirement plan options, and in particular at what employer contribution rate public employees would agree to switch to a defined contribution (DC) plan on a forward- looking basis. Overall, 89.2% of respondents are willing to accept a hard freeze of their defined benefit (DB) plan and the introduction of a DC plan at some contribution level. Conditional on acceptance, the median minimum contribution rate that respondents would require--if no additional retirement benefits would accumulate under their existing plan--is 10.0% of payroll, while the mean is 18.2% of payroll. The perceived and actual financial generosity of the pension plan relates negatively to the acceptance rate and positively to the minimum required contribution. More senior employees are somewhat less likely to accept the DC option, but there is over 80% acceptance even among long-tenured employees. Consistent with typical DB accrual patterns in the presence of early retirement options, employees with around 20 years of service require the largest DC contributions to switch. Employees who perceive the financial stability of their current plan as weaker are, on average, more likely to accept a DC plan and at lower contribution levels. We find no statistically significant heterogeneity with respect to educational attainment or financial literacy, making an explanation of the results based on cognitive ability less likely. In comparison to the economic cost of prevailing DB plans, introducing DC options that are acceptable to employees could potentially improve the sustainability of pension systems across the United States without compromising employees' satisfaction with their pension plan options.
    JEL: H55 H75 J26 J45
    Date: 2023–06
  7. By: Richard Blundell (University College London and Institute for Fiscal Studies); Jack Britton (University of York and Institute for Fiscal Studies); Monica Costa Dias (University of Bristol and Institute for Fiscal Studies); Eric French (University of Cambridge and Institute for Fiscal Studies); Weijian Zou (Institute for Fiscal Studies)
    Abstract: Using data from the Health and Retirement Study (HRS) and the English Longitudinal Study of Ageing (ELSA), we estimate the impact of health on employment. Estimating the model separately by race and gender, we find that racial differences in employment can be partly explained by the worse health of minorities and the larger impact of health on employment for these groups.
    Date: 2022–11
  8. By: Italo Lopez Garcia (University of Southern California); Kathleen J. Mullen (University of Oregon); Jeffrey B. Wenger (RAND)
    Abstract: We examine of the role of physical and mental job requirements, as well as hazardous working conditions, on retirement and disability among older individuals in the United States. By linking occupation-level data on job requirements from the Occupational Requirements Survey (ORS) to individual-level data from the Health and Retirement Study (HRS), we create composite indices for physical activities and the physical work environment, as well as two indices of mental job requirements related to job autonomy and flexibility index, and being supervised and working with the pubic. Using data from the HRS Life History Mail Survey, we merge these indices to the HRS panel using the most important occupation held by the individual in her prime years. We find that a 1 standard deviation (SD) increase in the physical activity and physical work environment indices are associated with a 10 to 13 percentage point (pp) increase in the probability of being retired and a 3 to 5 pp increase in the probability of transitioning into retirement. The associations of these indices with disability outcomes follow the same patterns as retirement, but they are lower in magnitude. A 1 SD increase in job autonomy/flexibility is associated with a 22 pp decrease in the probability of being retired and a 12 pp decrease in retirement transitions, but it does not predict disability outcomes. Finally, the effects of physically demanding and hazardous jobs on labor force exit are concentrated among men and low-educated workers, while delays in retirement predicted by higher job autonomy and flexibility are driven by college-educated workers.
    Date: 2022–09
  9. By: Tom Zawisza (University College London)
    Abstract: This project estimates the degree of disability risk among the United States and English over-50 populations. Using a disability measure that closely matches the criteria used by English and U.S. disability systems, we find both higher levels of disability in the U.S. and higher levels of disability risk in the U.S. Furthermore, we estimate spillovers between disability insurance and retirement pension program in the context of the increase in the United Kingdom retirement age for women in the years 2010 to 2019. We document that, despite a significant increase in disability benefit take-up among disabled individuals who would have been otherwise retired, these individuals experienced large losses in household income. Healthy individuals, in contrast, experienced much smaller losses in income, as they responded to the increase in the retirement age by increasing their labor-force participation. Finally, we develop a dynamic model of labor supply, social security benefits, and savings to evaluate the U.K. disability benefit system in the context of the U.K. retirement reform. This model uses as its inputs the parameters of the disability process we have estimated, and is estimated to match the responses to the reform. It can then be used to evaluate other joint reforms of disability and retirement program.
    Date: 2023–01
  10. By: Hindriks, Jean (Université catholique de Louvain, LIDAM/CORE, Belgium)
    Abstract: Ce rapport propose un état des lieux des pensions légales en Belgique et des pistes concrètes de réformes graduelles dans un cadre d’ensemble cohérent pour assurer la soutenabilité financière et l’adéquation sociale de nos régimes de pension. Dans la première partie, le rapport met en perspective la discussion sur les pensions en insistant sur l’urgence du vieillissement et le double sens du concept de soutenabilité qui s’adresse à la fois aux retraités actuels et aux retraités futurs. Il discute du double basculement : le basculement démographique et le basculement budgétaire. Les séries statistiques longues des dépenses et recettes de la sécurité sociale sont reconstituées pour la période 1995 et 2022. Ces séries révèlent un déficit croissant de notre sécurité sociale qui est comblé par le budget de l’Etat. Les inégalités de carrières sont mises en évidence sur base des données administratives et la réforme récente des pensions est présentée. Dans la seconde partie, le rapport propose un cadre cohérent pour assurer à la fois la soutenabilité financière et l’adéquation sociale de nos pensions au travers d’un Compte Pension. Les ajustements proposés sont graduels et préservent les droits du passé. Des projections comparent les effets d’une réforme de l’indexation (indexation reform) et d’une réforme du taux d’acquisition (accrual reform). L’adéquation sociale des pensions est abordée au travers d’un mécanisme de compensation pour la pénibilité des métiers et pour les écarts de longévité. Ce mécanisme est autofinancé et ses effets sont testés au moyen d’un simulateur pension.
    Keywords: Sécurité sociale ; pension ; vieillissement ; soutenabilité financière ; inégalité
    JEL: H55 J11 J14 J26
    Date: 2024–02–09
  11. By: Charles Brown (Institute for Social Research, University of Michigan); John Bound (Institute for Social Research, University of Michigan); Chichun Fang (Institute for Social Research, University of Michigan)
    Abstract: We use data from the Health and Retirement Study to identify the effect of job demands on applications for Social Security Disability Insurance and Supplemental Security Income benefits and to assess whether these job demands have been changing among older (ages 51 to 61) workers. We find that workers in jobs with physical demands — physical effort, stooping, heavy lifting — are more likely to apply for disability benefits, controlling for workers’ age, education, marital status, and health. We find that other job characteristics that we can measure — requiring good eyesight, concentration, and dealing with people; and being stressful and becoming more difficult — have little effect on disability benefit applications. We do not find a reduction in the physical demands of jobs held by older workers over our 1992 to 2016 sample period. When we control for workers’ education, they have increased. More in line with expectations, we find older workers’ jobs increasingly require good eyesight, concentration, and dealing with people, and weaker trend increases in stressfulness or increasing difficulty of the job. Together, these findings suggest that changing job requirements are unlikely to be an important driver of changing disability benefits applications in the foreseeable future.
    Date: 2023–04
  12. By: Delgado Chavarría, Manuel
    Abstract: Uno de los objetivos centrales de los sistemas de pensiones es contribuir a prevenir y erradicar la pobreza en la vejez. En América Latina y el Caribe los sistemas de pensiones no contributivos han jugado un papel central en el avance hacia este objetivo. Este documento aborda el estado actual y los desafíos del sistema de pensiones en Honduras, incluidos los retos de cobertura y suficiencia de sus prestaciones. En atención a la mayoritaria proporción de la población de personas mayores que hoy carece de acceso al sistema de pensiones en ese país, se analizan opciones para la implementación de un sistema de pensiones no contributivo y se evalúan sus posibles impactos en la reducción de la pobreza y la desigualdad. Se plantea que es posible avanzar en el diseño de un sistema de pensiones no contributivo desde una perspectiva de sostenibilidad integral, contribuyendo al mejoramiento de las condiciones de vida de las personas mayores en el país.
    Date: 2024–01–25
  13. By: Francisco Perez-Arce (University of Southern California); Lila Rabinovich (University of Southern California)
    Abstract: Social Security information can be complex but is crucial for financial planning. The Social Security Statement, which was recently redesigned, aims to better inform the public. We assess the impact of the Statement’s redesign on people’s understanding of Social Security, their interest in acquiring further information, and their intended behavior, including their intended age for claiming retirement benefits. We do this through a randomized control trial of an information treatment that uses the revised and old versions of the Statement for the treatment and control groups, respectively. Finally, we show respondents an information screen and links that encourage them to check the revised Statement through their my Social Security account, and test whether those exposed to the revised Statement are more likely to click on them. We find that the redesigned Statement is more successful in improving understanding of critical issues around benefits. We also find evidence of higher clarity and interest in acquiring more information among those assigned to the redesigned Statement treatment, though we find no effects on clicks to my Social Security links. The redesign also affects the ages respondents intend to claim, but these effects dissipated by the time of the follow-up survey.
    Date: 2022–09
  14. By: Susann Rohwedder (RAND); Péter Hudomiet (RAND); Michael D. Hurd (RAND)
    Abstract: We study out-of-pocket (OOP) medical expenditure risk of the U.S. population ages 55 and older using data from the Health and Retirement Study and its supplemental survey on household spending. We document trends in individual-level OOP spending from 1998 to 2018, both at the median and 95th percentile, showing a large increase until 2004, followed by rapid declines, so that 2018 OOP was less than 1998 OOP spending. We show how these changes impacted the budget share of OOP as a fraction of total household spending and analyze how households adjust the composition of their spending as OOP expenses vary. Because the distribution of OOP expenses is skewed, households face a non-negligible risk of incurring a large expense. We examined the extent to which OOP medical expenditures contribute to economic hardship among older households, as measured by food insecurity and skipping medications because of cost. We found a weak relationship with respect to food insecurity, suggesting that government programs, like Medicaid, help protect against OOP risk leading to such as an extreme form of hardship. However, we obtained statistically significant and economically meaningful effects with respect to medication insecurity: An increase from the 10th to the 90th percentile in OOP spending would increase the probability of medication insecurity by about 15 percentage points. When asked about their perceived OOP risk, individuals tend to substantially overestimate the chances of large OOP spending, although less so at advanced ages; prior experience with OOP expenses seems to lead to more accurate expectations.
    Date: 2022–10
  15. By: Yoko Ibuka (Faculty of Economics, Keio University & Department of Economics, University of Hawaii at Manoa); Junya Hamaaki (Faculty of Economics, Hosei University)
    Abstract: Studies suggest that mortality increases after income receipt. To examine whether the adverse effect of income on health is induced by economic activities and how certain economic activities are related to specific health conditions, we investigate within-month cycles in ambulance transport, utilizing detailed information on the locations of the origin and timing of the transports. Our analysis exploits the difference in the number of patients on the same day between payment and non-payment months, using the Japanese National Pension for the elderly that is distributed bi- monthly. We observe a 4.5% increase in ambulance transports on the day of pension payment, primarily attributed to heightened economic activities such as gambling or amusement, shopping, and dining out. We have suggestive evidence indicating that this increase in transport is linked to a relaxation in liquidity. These findings have implications for healthcare system preparedness and the optimal design of public benefit payment.
    Keywords: Emergency Medical Services, Social Security Payment, Time Stamp, Excess Sensitivity
    JEL: H55 H75 I12
    Date: 2024–03
  16. By: Rachel Scarfe; Daniel Schaefer; Thomas Sulka
    Abstract: We examine who bears the costs of mandated workplace pension programs, exploiting the quasi-experimental rollout of automatic enrollment in the UK. Total compensation (take-home pay plus employer contributions) increases, driven by employer contributions, while the amount of take-home pay decreases. These effects differ by employer size, with take-home pay declining to an extent in the largest firms that we can rule out a pass-through to employees of more than 47%, significantly less than in smaller firms. Our findings provide the first evidence that large employers shift the cost of mandated automatic enrollment onto employees.
    Keywords: Employer-sponsored retirement savings; Incentive design; Mandated benefits; Staggered difference-in-differences
    JEL: D21 H22 J32 J38
    Date: 2024–03
  17. By: John Bound (Institute for Social Research, University of Michigan); Charles Brown (Institute for Social Research, University of Michigan); Chichun Fang (Institute for Social Research, University of Michigan)
    Abstract: In this paper, we use administrative data from the Social Security Administration to validate survey responses for the Health and Retirement Study (HRS) regarding the application for disability benefits from Social Security Disability Insurance (DI) or Supplemental Security Income (SSI), focusing on applications that occurred after individuals entered the HRS. In our samples, amongst those that the administrative data identifies as having applied for DI or SSI, over 40% either do not report having applied or inaccurately identify whether or not the application was successful. We find some evidence that the less well educated, those with cognitive limitations, and those experiencing a health limitation on their capacity for work are more likely to misreport applications. We also explore the effect that reporting errors have on parameter estimates in a simple model of the application for DI benefits. Parameter estimates are qualitatively similar regardless of whether we use survey or administrative data to identify the application for DI benefits in our model.
    Date: 2023–04
  18. By: International Monetary Fund
    Abstract: The FSAP mission conducted a risk analysis for large insurance companies and retirement funds. Building on the narrative of the adverse macrofinancial scenario also used in the banking ST, the focus of the analysis in the insurance sector was on solvency. Sensitivity analyses, e.g., interest rate and currency shocks and the default of the largest banking counterparty, complemented the analysis. For retirement funds, future pension values were modeled after a materialization of the adverse scenario in the first two years of the projection horizon. The sample comprised four life insurers, four short-term insurers and four retirement funds, with a market coverage between 80 and 95 percent in each sector. Incomplete reporting data complicated the top-down modelling, specifically with regard to the geographical breakdown of investments for insurers, and the valuation of insurance liabilities.
    Date: 2024–03–05
  19. By: David Knapp (University of Southern California); Francisco Perez-Arce (University of Southern California)
    Abstract: Imperfect knowledge of public programs influences use and can lead to suboptimal decisions. We quantify significant disparities in Social Security program knowledge across race and ethnic groups. Differences in knowledge are not explained by differences in income, wealth, employment history, or educational achievement. We find evidence that there are racial/ethnic differences between perceived and actual knowledge of Social Security programs as well as differences in financial literacy, an important component of retirement planning. To identify mechanisms for alleviating these disparities, we investigate how knowledge relates to information sources about Social Security across race and ethnic groups. We find that Black and Hispanic respondents, on average, have fewer information sources. This gap corresponds to a difference in the ability to collect information from friends and family. Additional sources of information predict knowledge scores, even after accounting for confounders. The impact of racial and ethnic disparities in Social Security knowledge on post-claiming outcomes remains unclear. We present some suggestive evidence from retirement beneficiaries of a relationship between knowledge differences and subjective perceptions about the benefit claiming decision. Understanding causal mechanisms connecting racial and ethnic disparities in knowledge and outcomes likely requires an experimental design.
    Date: 2022–09
  20. By: Kathryn Anne Edwards (RAND); Daniel Schwam (RAND)
    Abstract: We use the 2014 and 2018 panels of the Survey of Income and Program Participation to create a schema of earnings that come from employee and nonemployee sources. Traditional earnings are from a job or incorporated business, while nontraditional earnings are from an unincorporated business or other work arrangement. We then create a typology of workers based on their experience with traditional and nontraditional earnings, describe workers of each type along dimensions of demographics, financial well-being, and beneficiary status, and use regressions to identify key predictors of earnings sources. Among prime-age workers, we find that workers with nontraditional earnings vary significantly based on whether the nontraditional earnings were the only source of wage income or in conjunction with traditional earnings. Among older workers, we find that receipt of Social Security benefits is a key predictor of nontraditional earnings. We discuss both findings and their research and policy implications.
    Date: 2023–01
  21. By: María J. Prados (University of Southern California, Center for Economic and Social Research); Jeremy Burke (University of Southern California, Center for Economic and Social Research)
    Abstract: The COVID-19 pandemic had severe impacts on the U.S. labor market with particularly large effects on working women. We use longitudinal survey data from a nationally representative internet panel to (1) document the pandemic’s gendered effects on employment and short-term financial stability and examine heterogeneity by race and ethnicity, marital status and household composition, and (2) use respondents’ earnings histories and expectations about future labor market participation and retirement age to forecast the impact on Social Security retirement benefits. Overall, while we find evidence that women suffered larger employment losses than men during the pandemic, consistent with prior research, our evidence suggests that the gender gap in employment was driven, at least in part, by women from traditionally more economically advantaged groups — white women, married women, and women in households with high incomes — leaving the workforce. We find little evidence that gender disparities in short-term economic stability grew as a result of the gender differences in employment. Rather our estimates suggest that gender gaps in short-term financial stability decreased over the first year of the pandemic, in part due heterogeneous effects from the stimulus. Despite the gender differences in employment dynamics for certain groups, we find no evidence of differential impacts on our forecasts for Social Security retirement benefits. Collectively, our evidence is consistent with the possibility that gender difference in employment was driven in part by relatively financially stable women voluntarily leaving the workforce.
    Date: 2022–10
  22. By: Hambel, Christoph (Tilburg University, School of Economics and Management); Kraft, Holger; Meyer-Wehmann, André
    Date: 2023
  23. By: Hellwagner, Timon (Institute for Employment Research (IAB), Nuremberg, Germany); Weber, Enzo (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Regensburg)
    Abstract: "Advanced economies will face population decline in the years and decades to come, particularly among those of working age. Yet, there is little empirical evidence of corresponding labor market implications. Tackling this shortcoming from a historical macroeconomic point of view, we compile a new dataset for sixteen advanced economies, covering demographic and labor market variables on an annual basis from 1875 to 2019. Based on a dynamic, nonlinear econometric model, we identify structural population shocks by using lagged births as external instruments for working-age population inflows and outflows, and trace the economic effects conditionally on the demographic regime. Our results suggest regime-specific differences: First, population decline quickly passes through to the labor market, translating into swifter disinvestment and decline in employment, but the effects of population growth take time. Second, in times of population decline, labor force participation increases as a response to reduced labor supply. Likewise, initially swift disinvestment tendencies decelerate. Consequently, we find only incomplete capital adjustment. Third, despite a declining labor supply, we find neither a decrease in unemployment nor any significant changes in wages as indicators of shortage. Finally, while population decline tends to depress total factor productivity, as also suggested by the literature, our results indicate that negative effects for economic growth are mitigated by increases in participation and the capital-labor ratio." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: E22 E24 J11 J21
    Date: 2024–03–15
  24. By: John Sabelhaus (Brookings Institution, University of Michigan)
    Abstract: The large and persistent gap by race in U.S. household wealth is a well-established empirical fact, though the causal mechanisms for wealth differentials are still a subject of much debate. Previous research on wealth inequality has shown that expanding the concept of wealth to include Social Security reduces overall wealth inequality (Sabelhaus and Volz, 2022a). These two observations motivate the questions and empirical approach in this study. Focusing on individuals born between 1936 and 1965 and observed at ages 51 to 56 in two household data sets, I first study wealth ratios and wealth rankings by race using conventional household wealth measures, and then study the implications of expanding the wealth measure to include Social Security. In the wealth measures excluding Social Security there is 23 percentage-point average wealth rank gap between Black and White individuals, and that falls to 13 percentage points after controlling earnings and other observables. Adding Social Security reduces racial wealth gaps, but also draws our attention to the fact that resolving expected Social Security funding shortfalls could have first order implications for wealth inequality and the racial wealth gap. Adding Social Security does not impact wealth rank gaps by race, however, which reinforces the need for further research on differences in wealth accumulation dynamics.
    Date: 2023–03
  25. By: Leandro Carvalho (University of Southern California); Arna Olafsson (Copenhagen Business School); Dan Silverman (Arizona State University)
    Abstract: We report on research that links survey and administrative data to investigate how within-couple differences in preferences and financial decision-making abilities affect household finances. We study whether within-household differences in preferences or financial decision-making abilities influence household choices and, thus, retirement readiness. Initial results indicate that, while individual variation in saving and portfolio preferences and decision-making ability is significantly related to individual variation in financial outcomes, there is only modest evidence that within-household variation in these measures is associated with between-household differences in expenditure, liquidity, and outcomes.
    Date: 2022–10
  26. By: Katherine Carman (RAND); Samer Atshan (RAND); Jhacova Williams (American University)
    Abstract: In this paper, we develop a new survey that seeks to better understand how differences in information sources (both formal and informal) across racial and ethnic groups contribute to knowledge and planning for retirement. We consider several scenarios where people might be eligible for Social Security benefits in times of need and seek to understand where individuals turn for information in these scenarios. Overall, we find that there are a wide variety of information sources that people approach in these times. Notably, different racial and ethnic groups expect to make use of different information sources. Furthermore, knowledge is associated with where people turn for information. To address disparities in knowledge, information campaigns could consider differentiating channels of information to better engaged less well-informed groups. This research doesn’t identify a single information source that would reach all people.
    Date: 2023–01

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