|
on Economics of Ageing |
| By: | Brian J. Asquith (W.E. Upjohn Institute for Employment Research) |
| Abstract: | Do older workers change their labor supply in response to unexpected housing wealth losses (or gains)? Housing wealth is the largest component in most older Americans’ portfolios, and they may seek to recoup losses by working longer to help smooth consumption in retirement. Despite its importance, prior studies have not arrived at a consensus answer. I perform three different analyses to re-approach this question using Health and Retirement Study (HRS) data: a descriptive analysis, two separate differences-in-differences-indifferences analyses exploiting the China Shock and the Great Recession, and an analysis employing autoregressive models for estimating unexpected shocks to housing price appreciation. All three analyses concur that older homeowners do not significantly change their labor supply or Social Security claiming behavior in response to unexpected housing wealth gains or losses. Subgroup analyses suggest that college-educated workers may be the most responsive, even though housing wealth makes up a lower share of their total wealth, probably due to their comparably greater employment resiliency in weak labor markets. |
| Keywords: | older workers, labor supply, homeownership, Chinese import competition |
| JEL: | J26 J22 J21 R23 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:upj:weupjo:25-415 |
| By: | Sauré, Philip; Seibold, Arthur; Smorodenkova, Elizaveta; Zoabi, Hosny |
| Abstract: | We study the role of occupations for individual and aggregate retirement behavior. First, we document large differences in individual retirement ages across occupations in U.S. data. We then show that retirement behavior among European workers is strongly correlated with U.S. occupational retirement ages, indicating an inherent association between occupations and retirement that is present across institutional settings. Finally, we find that occupational composition is an important predictor of aggregate retirement behavior across 45 countries. Our findings suggest that events affecting occupational structure, such as skill-biased technological change or international trade, can have consequences for aggregate retirement behavior and social security systems. |
| Keywords: | retirement; occupations; labor force composition |
| JEL: | E24 H55 J14 J24 J26 J82 |
| Date: | 2025–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127787 |
| By: | Andrew C. Johnston; Jonah E. Rockoff; James R. Harrington |
| Abstract: | We examine the effect of a representative pension reform on the retention and productivity of workers. The reform cut pension annuities and early retirement benefits for public school teachers, projected to save eight percent of pension revenues. We leverage administrative records and a discontinuity in the reform to estimate its effect. Contrary to expectations, the cut increased retention by discouraging early retirement. Using idiosyncratic within-school variation in exposure, we find the reform somewhat increased student achievement by 0.01–0.03 standard deviations, partly through reduced turnover. The reform thus maintained or improved both teacher retention and productivity. |
| JEL: | H75 J26 M52 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33673 |
| By: | John T. Giles; Clement Joubert; Tanaka, Tomoaki |
| Abstract: | Low- and middle-income countries are aging rapidly but stagnation of growth in participation in pension programs, due to widespread informal employment, presents a major fiscal challenge. Some claim that improving the design of pension program rules can encourage more pension contributions, while others push for universal non-contributory pensions. This paper reviews the recent academic literature on the determinants of active participation in pension systems in high- informality settings. An emerging body of evidence shows that participation responds significantly to financial incentives as well as nonfinancial obstacles. At the same time, pensions are imperfect substitutes for other strategies to cover longevity risk, including support through the family, which will remain crucial for many older people in fiscally constrained environments. Therefore, policy makers should integrate the design of contributory pensions, social pensions, and policies that facilitate other forms of elderly support and consider how all three interact. To inform such efforts, these interactions must be more systematically investigated, and the empirical evidence must be expanded beyond a small number of middle-income countries. |
| Date: | 2025–04–24 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11105 |
| By: | Bryan Gutierrez Cortez; Victoria Ivashina; Juliana Salomao |
| Abstract: | Are defined contribution (DC) pension funds' capital flows sensitive to performance? We examine pressures from individual account holders who can switch their pension managers. Using novel data on retirement accounts for nearly 10 million individuals, we analyze switching behavior based on the plan’s risk profile. Switching across managers within the same pension product is not uncommon, and the tendency to change managers rises over time. Capital flows are sensitive to and increase with fund performance. This sensitivity creates pressure on managers, shaping their incentives and portfolio decisions. A quasi-exogenous increase in outflows leads managers to shift toward higher-yielding bond holdings. |
| JEL: | G11 G23 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33693 |
| By: | Lin, Zhuoer (University of Illinois at Chicago); Qian, Yuting (Yale University); Gill, Thomas M. (Yale University); Hou, Xiaohui (World Bank); Allore, Heather (Yale University); Chen, Shanquan (University of Cambridge); Chen, Xi (Yale University) |
| Abstract: | Assistance with daily activities is crucial for persons living with dementia and disabilities, yet many face significant challenges in accessing adequate care and support. Using harmonized longitudinal survey data (2012-2018) from the United States, England, 18 European countries and Israel, and China, we found that at least one-fifth of persons with dementia and disabilities received no personal assistance for basic or instrumental activities of daily living (ADL/IADL), regardless of regional development level. Care gaps were widespread across both ADL and IADL limitations, as well as for informal and formal care. Disparities were evident, with less-educated individuals more likely to lack formal care, while those living alone often lacked informal support, resulting in the absence of any care. Alarmingly, care availability showed no improvement over time. Our findings underscore the urgent need for policies to address inequities and ensure critical access to care services for this vulnerable population worldwide. |
| Keywords: | IADL, ADL, disability, dementia, global aging, unmet need, elder care |
| JEL: | J14 J18 I11 I18 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17777 |
| By: | Ignacio Raul Apella; Zunino, Gonzalo |
| Abstract: | This paper estimates the proportion of workers who would meet the required contribution periods to access a contributory retirement pension in the Dominican Republic. Using microdata from labor histories, the paper proposes a survival model to estimate the hazard rates of entering and exiting the contributory state in the pension system. Furthermore, a Monte Carlo simulation is performed to project contributory histories. The results suggest that the transition rates are relatively high, averaging a probability of exiting the contributory (non-contributory) state of 7 percent (6 percent). Moreover, the hazard rate of transitioning to a different state is negatively associated with the worker’s duration in the current state. These effects are conditioned to the age and income level of the worker. Finally, a simulation of new labor histories estimates that slightly more than 20 percent of the workers would meet the requirement of 30 years of contributions by age 60, and this percentage would exceed 40 percent if the required years of contributions were reduced to 20. |
| Date: | 2025–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11103 |
| By: | Donehower, Gretchen (University of California, Berkeley) |
| Abstract: | Aging populations in Asia are worried that they are facing a “care crisis, ” with many older people in need of care having no one to care for them. However, we do not have a clear picture of current care patterns: How much care is currently being consumed? Who is providing that care? Are women and men serving equally as paid or unpaid caregivers? We explore the methods for answering some of these basic empirical questions about unpaid care work using the National Time Transfer Accounts, which show that older people are far from being a major source of unpaid care demand, but are making net transfers of time to other age groups well into their elder years. In our group of Asian countries (Bangladesh, India, the Republic of Korea, Mongolia, Thailand, Türkiye, and Viet Nam), these time transfers come on average from women. |
| Keywords: | eldercare; childcare; unpaid care work; time use; transfers |
| JEL: | J13 J14 J16 J22 |
| Date: | 2025–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:0777 |
| By: | Erzo F.P. Luttmer; Priscila de Oliveira; Dmitry Taubinsky |
| Abstract: | This paper studies psychological biases in take-up of annuities, using an incentivized experiment with a probability-based sample (N = 3, 038). Choosing an annuity was payoff-maximizing in the experiment at all prices, but take-up was incomplete and price elastic. Reformulating decisions as insurance against a “bad” outcome rather than insurance against “longevity risk” did not increase take-up. Instead, we find substantial failures of contingent reasoning: participants under-appreciated how annuitization mitigated the need for less-efficient means of saving for retirement. Increasing the salience of the interaction with savings decisions, or eliminating the need to think through this interaction altogether, substantially increased annuity take-up. |
| JEL: | D14 D15 D9 G5 J26 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33654 |
| By: | Javier Adrián López Artero; Anna Sanz-de-Galdeano; Daniela Vuri |
| Abstract: | We analyze the impact of unexpected health shocks—defined as the sudden diagnosis of cancer, stroke, or heart attack—on the probability of couple dissolution using longitudinal representative data on older individuals (50+). We leverage the longitudinal nature of the HRS and utilize a quasi-experimental research approach that creates counterfactual scenarios for affected households by comparing them to households set to experience the same event in subsequent years. We find that experiencing a health shock significantly increases the probability of couple dissolution by approximately 19% of the mean divorce prevalence. This effect intensifies gradually over time rather than appearing immediately after the adverse health event. Additionally, we examine several mechanisms through which health shocks may influence divorce, focusing on three potential channels: mental health, cognitive decline, and financial strain. Our findings suggest that all three mechanisms likely play a role in mediating the relationship between health shocks and the increased probability of divorce. |
| Keywords: | health shocks, divorce, aging. |
| JEL: | I14 I24 J15 Z13 J13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11824 |
| By: | Alistair Macaulay (University of Surrey); Chenchuan Shi (University of Oxford) |
| Abstract: | This paper studies how wealth and aging affect portfolio choices in a life-cycle model with ambiguity aversion. Ambiguity aversion implies that wealthier and older agents are endogenously more optimistic about risky asset returns, relative to poorer younger agents. As life expectancy grows, old agents become even more optimistic, while young agents become more pessimistic, amplifying the age gaps in portfolio composition, and implying further increases in intergenerational inequality. We find evidence for the mechanism in survey data on portfolios and subjective life expectancy. In a quantitative extension of the model, plausible life expectancy projections imply a 26% increase in the age-gradient of conditional risky asset shares between 2019 and 2100. |
| JEL: | D84 E21 G11 J11 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:sur:surrec:0425 |
| By: | Lekfuangfu, Warn N. (Universidad Carlos III de Madrid); Olivera, Javier (National Bank of Belgium); Van Kerm, Philippe (University of Luxembourg) |
| Abstract: | Drawing on two data sources from across Europe, we show that both bequest motives of parents and children’s gender composition shape unequal divisions of bequests. First, the Survey on Health, Ageing and Retirement in Europe reveals that observed bequests are divided unequally when children differ in sex, caregiving, or income, with bequest motives strongest among mixed-sex children. Second, in a vignette experiment featuring alternative bequest motive scenarios and randomised gender compositions for two fictitious children, hypothetical bequests are most unequally divided under the exchange motive while children’s gender composition matters more under the altruistic motive. Fictitious parents favour daughters regardless of deservingness, granting the highest bequest share to a deserving daughter with a brother. In return, these patterns reinforce traditional gender norms. |
| Keywords: | altruism, deservingness, vignette experiment, gender, intergenerational transfers, bequest, exchange, Europe, HFCS, SHARE |
| JEL: | H24 D31 D63 E62 H53 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17833 |
| By: | Jacob Funk Kirkegaard (Peterson Institute for International Economics) |
| Abstract: | As the world and especially other Asian and European economies enter the accelerated process of aging that Japan experienced from the mid-1990s onwards, learning the right policy lessons from Japan's response is crucial. This paper argues that, overall, Japan has done relatively well by implementing a response that--even if often belatedly so--has mitigated some of the worst economic effects of aging. Japan has successfully raised domestic labor utilization and immigration levels, integrated its economy more with the rest of the world, and implemented a fiscal policy based on debt expansion that has seen debt costs decline. Other advanced Asian economies and China now face aging processes materially faster than Japan's and will age simultaneously rather than alone like Japan. In addition, many advanced economies will age during a period of much slower global economic growth and less rather than more global trade and investment opening than what Japan faced from the mid-1990s. These less benign international economic and political circumstances mean that many advanced economies will likely not age with the same relative political and economic stability seen in Japan in the last 30 years. In time, this paper argues, "Japanification" will no longer mean a slowly developing economic disaster but will come to mean competent management of a very difficult economic transition. |
| Keywords: | Japan, Aging, Demographics, Labor Utilization, Immigration, Productivity, Fiscal Policy, Government Debt and Deficits |
| JEL: | E24 E63 F22 H30 H51 H55 H62 J11 J13 N15 N35 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp25-4 |
| By: | Kabir Dasgupta; Jeff Larrimore; Alicia Lloro; Zofsha Merchant; Ellen A. Merry; Fatimah Shaalan; Anna Tranfaglia |
| Abstract: | Results from the 2023 Survey of Household Economics and Decisionmaking (SHED) indicate that people’s overall financial well-being was nearly unchanged from the previous year but below the high reached in 2021. Despite the moderating pace of inflation, many adults continued to indicate that higher prices were a challenge in managing their finances. The survey, which was fielded in October 2023, showed similar patterns for other measures of financial resiliency as well. Both the share of adults who spent less than their income in the month before the survey and the share who would pay for an unexpected $400 expenses with cash or the equivalent were nearly unchanged from 2022, yet both were down from 2021. Among adults who were not retired, the share who felt that their retirement savings plan was on track rose slightly from 2022, possibly reflecting stock market gains, but remained below the share who felt their retirement savings was on track in 2021. |
| Date: | 2024–05–21 |
| URL: | https://d.repec.org/n?u=RePEc:fip:g00002:5133 |