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on Economics of Ageing |
| By: | Andrew G. Biggs; Alicia H. Munnell; Michael Wicklein |
| Abstract: | The U.S. Treasury estimates that the tax preference for employer-sponsored retirement plans and IRAs reduced federal income taxes by about $185-$189 billion in 2020, equal to about 0.9 percent of gross domestic product. Other estimates of the costs are even larger. However, the best evidence suggests that the federal tax preferences do little to increase retirement saving. While this dismal assessment may sound like bad news, it actually offers policymakers an opportunity to strengthen the nation’s retirement income system. Revenues saved from repealing the retirement saving tax preferences could be reallocated to address the majority of Social Security’s long-term funding gap, strengthening a program that is crucial for the retirement security of older Americans while bypassing a decades-old debate about raising taxes or reducing Social Security benefits. This study reassesses the favorable tax treatment of retirement plans and explores an opportunity to use taxpayer resources more productively. The first section addresses the revenue loss, considering the impact not only on the personal income tax but also the payroll tax, concluding that the revenues forgone are significant no matter how they are measured. The second section examines who receives these tax expenditures, concluding that the bulk goes to high earners. The third section explores what taxpayers get for their money, finding that the favorable tax treatment has failed to significantly increase national saving. Given the enormous federal deficits and overwhelming demands on the federal budget, the fourth section explores ways to recoup all or some of the tax subsidies currently accorded retirement saving. The fifth section explores how the savings from eliminating or reducing the tax subsidies could be applied to Social Security. The final section concludes that it makes little sense to throw more and more taxpayer money at employer plans and IRAs. In fact, the case is strong for eliminating the current tax expenditures on retirement plans, and using the increase in tax revenues to address Social Security’s long-term financing shortfall. |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:crr:crrwps:wp2024-1 |
| By: | Petra Sohlman; Risto Louhi; Janne Salonen |
| Abstract: | Using unique research data, we investigate disability retirement risk under the statutory public sector pension scheme in Finland. The statistical analysis yields two indicators: risk for upcoming permanent disability pension and critical duration of sickness absence days for public sector occupations. Statistical analysis is based on logistic regression model where the outcome is the disability pension, using sickness benefit spells and other individual background information as covariates. The results underline the importance of minimizing the sickness spells and their duration to the risk and reveal differences in risk across occupations. We conclude that the proposed risk model is a promising tool which can help employers and the pension industry in preventing permanent disability. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.19890 |
| By: | Minh Tam Bui (Faculty of Economics, Srinakharinwirot University, THAILAND); Ivo Vlaev (Warwick Business School, University of Warwick, UK); Katsushi Imai (Department of Economics, The University of Manchester, UK and Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | Ageing society poses an increasing need for elderly care and the essential role of unpaid family care in developing countries where more care burdens are imposed on women. Literature on the driver of gender care gap is limited and its association with social gender norms is both understudied and hardly measured/quantified. Using time-use data in 2014-15 and Labor Force Survey data in 2013-15 from Thailand, we first construct an altruistic time ratio for the whole sample to measure the extent to which individuals spend time on unpaid activities for others than themselves. We found that significant gender gaps in providing eldercare are associated with gender differences in altruistic time ratio. To consider the non-random selection for the elderly care, we then estimate the Tobit model with propensity score matching (PSM) for both elderly carers and non-carers and found that the social gender norm, defined as the district-level gender difference in the modes of altruistic time ratio, explains why women are more burdened with elderly care than men. To examine the underlying mechanisms behind women's time burden, we estimate a simultaneous equation Tobit consisting of elderly care time, leisure time, and time for paid work. The results show that the social gender norm indirectly reduces elderly care time for women by significantly reducing leisure time and paid work time, while the direct effect is dominant for men. The trade-off between paid work time and elderly care time is similar for men and for women, while that between leisure time and elderly care time is greater for men. Associations between elderly care and altruism or peer pressure imply that behavioural changes with a focus on social norms and social policies inducing such changes are important to achieve more gender-equitable eldercare provision besides the state provision of long-term care. |
| Keywords: | Unpaid work; Time use; Elder care; Gender gaps; Altruism; Behavioral change |
| JEL: | D13 D64 D9 J14 J16 J22 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2024-37 |
| By: | Edyta Marcinkiewicz; Filip Chybalski |
| Abstract: | Our study contributes to the discussion on the impact of imputed rent on poverty. In this paper, we address the issue of the relevance of imputed rent specifically in regard to the welfare of older people. Our aim is to assess how imputed rental income relates to monetary income for both homeowners and subsidized tenants, to draw more comprehensive picture of poverty among retirees, who are considered to be an economically vulnerable group. We employ the Luxembourg Income Study database (wave X) to compare the situation of elderly households in seventeen countries in this respect. The results obtained demonstrate that although imputed rental income is quite universal among the older population, there is a lot of a cross-country variation in this respect, which partly can be attributed to the methodological constraints. Nonetheless, we can conclude that imputed rental income contributes to poverty reduction. This also entails some policy implications in the long run, especially in the face of housing market shifts, rising wealth inequalities and the expected reduction in the generosity of public pensions. |
| Date: | 2023–04 |
| URL: | https://d.repec.org/n?u=RePEc:lis:liswps:857 |
| By: | Wang, Yansong; Xu, Tao; Yuan, Cheng |
| Abstract: | This research employs the Alkire-Foster approach to measure multidimensional poverty between 2012 and 2020 in China, followed by examining the role of the three-pillar pension system in mitigating household multidimensional poverty. With the China Family Panel Studies data, our measurement uncovers the sustainable effects and mechanisms of household participation in the multi-pillar pension system on poverty mitigation. The results indicate that more participation in the pension system mitigates the probability of being trapped in multidimensional poverty. The findings reveal the significance of state social insurance, enterprise annuity, and individual commercial insurance. The mitigation effect of market-oriented pillars is achieved through more investment in and consumption for livelihood assets. Based upon the sustainable livelihoods framework, livelihood assets ameliorate household capabilities in human, natural, financial, and psychological capital against risks, shocks, and uncertainties. Our research contributes to the knowledge of how household participation in pension pillars sustainably mitigates multidimensional poverty through micro-level mechanisms and to the policy praxis of why a facilitating state is called for poverty mitigation from the perspective of new structural economics. |
| Keywords: | multidimensional poverty; three-pillar pension system; facilitating state; sustainable livelihoods; new structural economics |
| JEL: | H5 H51 H53 H55 I32 I38 P2 P3 Z18 |
| Date: | 2024–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122596 |
| By: | Gary V. Engelhardt |
| Abstract: | In the three decades from 1980 to 2010, there was a steady rise in the number of men receiving Social Security Disability Insurance (DI) benefits. The number of beneficiaries peaked in 2012 and has declined significantly since the end of the Great Recession, tracking very closely the (pre-pandemic) fall in the national unemployment rate and improvement in other labor-market fundamentals. Although general population aging and the business cycle have had clear effects on the number of recipients, one factor that has gone relatively understudied is the aging of the formerly incarcerated population. This paper examines the relationship between past incarceration and later-life DI and SSI receipt, as well as poverty status. To isolate causal effects independently from other factors, this analysis uses detailed micro-data from three nationally representative surveys—the Health and Retirement Study (HRS), National Longitudinal Survey of Youth 1979 Cohort (NLSY79) and the American Community Survey (ACS)—and a novel econometric identification strategy. The strategy relies on the timing of the entry of crack cocaine in the 1980s that differed across locations (states) to form an instrumental variable for the likelihood of incarceration. |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:crr:crrwps:wp2023-24 |
| By: | Richard W. Johnson; Karen E. Smith |
| Abstract: | This paper compares Social Security outcomes for non-Hispanic Black, Hispanic, and non-Hispanic white beneficiaries and assesses the capacity of various benefit enhancements to narrow racial and ethnic disparities in Social Security benefits. Using the Dynamic Simulation of Income Model 4 (DYNASIM4), we project, under current law and each benefit enhancement, lifetime Social Security benefits, the share of beneficiaries receiving limited annual benefits, and the share with limited annual income. To capture the fully phased-in impact of each option, we project annual outcomes in 2080 and lifetime outcomes for adults born between 2001 and 2010. |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:crr:crrwps:wp2023-22 |
| By: | Alvaredo, Facundo (Paris School of Economics); Berman, Yonatan (King's College London); Morelli, Salvatore (Roma Tre University) |
| Abstract: | This paper studies the estimation of wealth distribution using estates left at death. We establish formal conditions for adopting a simplied version of the classic estate multi- plier method, using only minimal information on estates and mortality. We empirically validate these conditions and apply the simplied approach to produce novel long-run top wealth share series for Belgium, Japan, and South Africa, where estate data have not yet been exploited. This approach may vastly expand the range of countries and years for which wealth inequality can be estimated, where estate data exist but the standard method cannot be applied. |
| Keywords: | public economics, wealth inequality, estate tax, mortality rates |
| JEL: | D3 H2 N3 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17389 |
| By: | Alfredo Palacios; Simon Walker; Beth Woods; Gerry Richardson |
| Abstract: | Background: Transitioning from hospital to home presents significant challenges, particularly for patients aged 75 and above. The 'Your Care Needs You' (YCNY) intervention, evaluated through a cluster randomised controlled trial (cRCT), aims to empower these patients by providing essential information and skills to prepare them for being at home. This study evaluates the cost-effectiveness of the YCNY intervention compared to standard care within the UK National Health Service (NHS) over the trial's duration (90 days post-discharge). Methods: The economic evaluation utilised individual patient-level data from the YCNY cRCT. The analysis was conducted from the perspective of the NHS and Personal Social Services. The analysis calculated the adjusted mean differences in costs and Quality-Adjusted Life Years (QALYs) between the YCNY intervention and control groups. In our base case, Multilevel Mixed-Effects Generalised Linear Models (MME-GLM) were employed to account for the hierarchical data structure. Additional alternative scenarios and a probabilistic sensitivity analysis were conducted to assess the robustness of the findings. Results: The base case results indicated the YCNY intervention reduced costs ({\pounds}269) and improved outcomes (QALY gain of 0.0057). The net health benefit (NHB) of the YCNY intervention using a cost-effectiveness threshold of {\pounds}15.000/QALY was 0.0246. These findings suggest the YCNY intervention dominates usual care, with a high probability (89%) of the YCNY intervention being cost-effective at a {\pounds}15, 000 per QALY threshold. The results remained robust across several alternative scenario analyses. Discussion: The YCNY intervention could represent a promising and potentially cost-effective approach for enhancing the safety and experience of older adults transitioning from hospital to home in the UK. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.04339 |