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on Economics of Ageing |
| By: | Gonzalo Javier Reyes Hartley; Miglena Abels |
| Abstract: | This report examines the state of pension and social insurance systems globally, focusing on old-age income protection. It analyzes expenditure, coverage, adequacy of benefits, and sustainability of both contributory and non-contributory pension schemes. The report highlights the impact of population aging on pension systems, emphasizing the need for reforms to ensure fiscal sustainability and adequate benefits. It also explores the challenges of extending coverage to informal sector workers and the importance of gender equity in pension provision. The report concludes with recommendations for adapting pension systems to evolving economic and demographic realities, emphasizing the need for inclusive and sustainable solutions. |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:hdnspu:200230 |
| By: | Kanta Ogawa |
| Abstract: | Older male workers exhibit diverse retirement behaviors across occupations and respond differently to policy changes, influenced significantly by the part-time penalty, wage reduction faced by part-time workers compared to their full-time counterparts. Many older individuals reduce their working hours, and in occupations with high part-time penalties, they tend to retire earlier, as observed in data from Japan and the United States. This study develops a general equilibrium model that incorporates occupational choices, endogenous labor supply, highlighting that the impact on the retirement decision is amplified by the presence of assets and pensions. I find that cutting employees' pension benefits reduce aggregate labor supply in occupations with high part-time penalties in Japan, reducing overall welfare across the economy. In contrast, increasing income tax credits and exempting pension form income tax boost labor supply across all occupations and enhance welfare by raising disposable wages relative to the reservation wage. Reducing part-time penalties in high-penalty occupations also stimulate the labor supply in high-penalty occupations and improve long-term welfare. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.17917 |
| By: | Sinclair, David R.; Maharani, Asri; Clegg, Andrew; Hanratty, Barbara; Tampubolon, Gindo; Todd, Chris; Wittenberg, Raphael; O'Neill, Terence W.; Matthews, Fiona E. |
| Abstract: | Background The older population is increasingly reliant on social care, especially those who are frail. However, an estimated 1.5 million people over 65 in England have unmet care needs. The relationship between receiving care, or receiving insufficient care, and changes in frailty status remains unclear. Objectives To investigate the associations between care receipt (paid or unpaid), unmet care needs, frailty status, and mortality. Design We used multistate models to estimate the risk of increasing or decreasing levels of frailty, using English Longitudinal Study of Ageing (ELSA) data. Covariates included age, gender, wealth, area deprivation, education, and marital status. Care status was assessed through received care and self-reported unmet care needs, while frailty status was determined using a frailty index. Participants 15, 003 individuals aged 50+, using data collected over 18 years (2002–2019). Results Individuals who receive care are more susceptible to frailty and are less likely to recover from frailty to a less frail state. The hazard ratio of males receiving care transitioning from prefrailty to frailty was 2.1 [95 % CI: 1.7–2.6] and for females 1.8 [1.5–2.0]. Wealth is an equally influential predictor of changes in frailty status: individuals in the lowest wealth quintile who do not receive care are as likely to become frail as those in the highest wealth quintile who do receive care. As individuals receiving care (including unpaid care) are likely to be in poorer health than those who do not receive care, this highlights stark inequalities in the risk of frailty between the richest and poorest individuals. Unmet care needs were associated with transitioning from prefrailty to frailty for males (hazard ratio: 1.7 [1.2–2.4]) but not for females. Conclusions Individuals starting to receive care (paid or unpaid) and people in the poorest wealth quintile are target groups for interventions aimed at delaying the onset of frailty. |
| Keywords: | ELSA; healthy ageing; multistate model; prefrail; unmet need for care |
| JEL: | N0 |
| Date: | 2025–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127642 |
| By: | Goda, Gopi Shah; Levy, Matthew R.; Flaherty Manchester, Colleen; Sojourner, Aaron; Tasoff, Joshua; Xiao, Jiusi |
| Abstract: | We conduct a randomized controlled trial to understand how a web-based retirement saving calculator affects workers' retirement-savings decisions. In both the treatment and active control conditions, the calculator projects workers' retirement income goal. In the treatment condition only, it also projects retirement income based on defined-contribution savings, prominently displays the gap between projected goal and actual retirement income, and allows users to interactively explore how alternative, future contribution choices would affect the gap. The treatment increased average annual retirement contributions by $174 (2.3 percent). However, effects were larger for those with higher measures of financial knowledge, suggesting this type of tool complements, rather than substitutes for, underlying financial capability. |
| Keywords: | exponential-growth bias; financial capability; financial literacy; present bias; retirement planning; retirement saving |
| JEL: | D14 G23 |
| Date: | 2023–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:120272 |
| By: | Horioka, Charles Yuji; Gahramanov, Emin; Tang, Xueli |
| Abstract: | The purpose of this paper is to conduct a theoretical and empirical analysis of the nexus between long-term care insurance (LTCI), formal care, informal (family) care, and bequests. In our empirical analysis, we use micro data from the Japan Household Panel Survey on Consumer Preferences and Satisfaction (JHPS-CPS), formerly known as the Preference Parameter Study, conducted by Osaka University. Japan is an interesting case to analyze because a public LTCI system was introduced there in 2000. Our analysis shows that, in the case of Japan, if parents are eligible for public LTCI benefits, their children will be less likely to be their primary caregiver and that this, in turn, will reduce their children's perceived likelihood of receiving a bequest from them. This result implies that bequests are selfishly or strategically motivated (i.e., that parents leave bequests to their children in order to elicit care from them) and that the introduction of a public LTCI system will reduce the likelihood of children providing care to their parents and through this channel reduce their perceived likelihood of receiving a bequest from them. |
| Keywords: | Altruistic bequests, bequests, caregiving, elderly care, family care, formal care, informal care, long-term care, long-term care insurance, parental care, selfish bequests, strategic bequests |
| JEL: | D11 D12 D15 D64 E21 I13 J14 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:agi:wpaper:02000105 |
| By: | Gérard-François Dumont (ENeC - Espaces, Nature et Culture - UP4 - Université Paris-Sorbonne - CNRS - Centre National de la Recherche Scientifique, MÉDIATIONS - Sciences des lieux, sciences des liens - SU - Sorbonne Université) |
| Abstract: | Any observer of the French pension system can only make two observations. Firstly, it is an unstable system which, with the exception of a few pension schemes, has failed to adopt a form of governance and management that would allow it to adapt to changes without recourse to new legislation. As a result, we re-gularly see legislation introducing parametric reforms to the length of time people have to work to qualify for a full pension, the retirement age and contribution rates. Second, it is a system whose periodic reforms create considerable tension, particularly between the government and the unions. Each time, the opposition of the day, the vast majority of trade union organisations and a whole section of the population reject what is proposed. The fact that, when an opposition comes to power, it generally does not go back on the decisions taken by a previous majority does not change the fact that parametric reforms never reach a consensus. How can this situation be explained? It seems to us that the answer lies in the fact that France has committed, or is still committing, seven deadly sins when it comes to pensions. We know that these were identified by St Thomas Aquinas in the 12th century in the following order: pride, gluttony, lust, avarice, jealousy, anger and sloth. However, we feel it would be more educational to tackle them in a different order, starting with envy. |
| Abstract: | Tout observateur du système de retraite en France ne peut que dresser les deux constats suivants. D'abord, c'est un système instable qui n'a pas su, à l'exception de quelques régimes de retraite, mettre en œuvre un mode de gouvernance et de gestion qui permettrait de s'adapter aux évolutions sans le recours à de nouvelles lois. Il en résulte périodiquement des législations décidant des réformes paramé-triques concernant la durée de travail permettant d'obtenir une retraite à taux plein, l'âge de départ à la retraite ou encore des taux de cotisation. Ensuite, c'est un sys-tème dont les réformes périodiques donnent lieu à de fortes tensions, notamment entre le gouvernement qui les portent et les syndicats de salariés. À chaque fois, l'opposition du moment, la grande majorité des organismes syndicaux et toute une partie de la population rejettent ce qui est proposé. Le fait qu'une opposition, arri-vée au pouvoir, ne revienne généralement pas sur les décisions prises par une pré-cédente majorité ne change rien au constat que les réformes paramétriques ne par-viennent nullement à faire consensus. Comment expliquer une telle situation ? Il nous semble que la réponse tient à ce que la France, sur cette question des retraites, a commis ou continue de commettre sept péchés capitaux. On sait que ces derniers ont été identifiés par saint Thomas d'Aquin au XIIe siècle dans l'ordre suivant : orgueil, gourmandise, luxure, avarice, jalousie, colère et paresse. Toutefois, il nous semble plus pédagogique de les aborder dans un autre ordre, à commencer par l'envie. |
| Keywords: | Pension, France, working hours, retirement age, population, Retraite, durée de travail, âge de départ à la retraite |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-05021414 |
| By: | Horioka, Charles Yuji; Ventura, Luigi |
| Abstract: | In this paper, we analyze the saving motives of European households using micro-data from the Household Finance and Consumption Survey (HFCS), which is conducted by the European Central Bank. We find that the rank ordering of saving motives differs greatly depending on what criterion is used to rank them. For example, we find that the precautionary motive is the most important saving motive of European households when the proportion of households saving for each motive is used as the criterion to rank them but that the retirement motive is the most important saving motive of European households if the quantitative importance of each motive is taken into account. Moreover, the generosity of social safety nets seems to affect the importance of each saving motive, with saving for the retirement motive being less important in countries with generous public pension benefits and saving for the precautionary motive being less important in countries with generous health systems. These findings suggest that the retirement motive and the precautionary motive are the dominant motives for saving in Europe partly because social safety nets are not fully adequate. Our finding that saving motives that are consistent with the selfish life-cycle model as well as saving motives that are consistent with the altruism model are important in Europe implies that the two models coexist in Europe, as is the case in other parts of the world. However, our finding that the retirement motive, which is the saving motive that most exemplifies the selfish life-cycle model, is of dominant importance in Europe strongly suggests that this model is far more applicable in Europe than is the altruism model. Moreover, our finding that the intergenerational transfers motive, which is the saving motive that most exemplifies the altruism model, accounts for only about one-quarter of total household wealth in Europe provides further corroboration for this finding. |
| Keywords: | altruism model, bequests, European Central Bank, Household Finance and Consumption Survey, households, household saving, household wealth, inheritances, inter vivos transfers, intergenerational transfers, precautionary saving, retirement |
| JEL: | D12 D14 D15 D64 E21 J14 |
| URL: | https://d.repec.org/n?u=RePEc:agi:wpaper:02000107 |
| By: | Fabiani, Beatrice; Costa-Font, Joan; Aranco, Natalia; Stampini, Marco; Ibarrarán, Pablo |
| Abstract: | Demographic and social changes Latin America and the Caribbean (LAC) have called the traditional system of long-term care service provision into question, prompting many countries to prioritize long-term care reform on their social policy and fiscal agendas. One of the issues at hand is determining the expected service costs as well as the financial viability and sustainability of various funding options. To date, estimating the demand for care in Latin American countries is limited due to the underdeveloped and fragmented systems in place. This paper estimates the potential cost of various long-term care service packages that differ in terms of the extent and type of government funding. Second, we investigate the financing sustainability of different coverage scenarios across seventeen countries in the LAC region. Finally, we assess the feasibility of various funding mechanisms and discuss the main benefits and drawbacks considering each country's unique constraints. Our estimates indicate that, while all seventeen LAC countries have the potential to implement a LAC system based on general taxation, a social insurance system is only feasible in a handful set of countries. |
| Keywords: | long-term care; population aging; Latin America and the Caribbean; social insurance; public finance; tax financing |
| JEL: | H50 I18 J14 J18 O54 |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127121 |
| By: | Patrick Aubert (IPP - Institut des politiques publiques) |
| Abstract: | En France, le moment auquel un assuré peut partir à la retraite avec le taux plein dépend de la durée de sa carrière davantage que de son âge, et certains arguent même qu'il devrait en dépendre exclusivement. Cette situation découle du cadre réglementaire mis en place lors de la réforme des retraites de 1983, dont les principes généraux sont restés en place malgré les diverses réformes ayant eu lieu depuis. Le critère de durée comme condition d'obtention du taux plein est ainsi, dans l'imaginaire, souvent associé au fait « d'avoir permis la retraite à 60 ans ». Si cette condition a souvent été justifiée en invoquant la moindre espérance de vie supposée de ceux à qui elle bénéficie, de nouvelles estimations montrent que ce n'est en réalité pas le cas. Les personnes à qui le système de retraite permet de partir au taux plein plus tôt n'ont pas une mortalité plus élevée. Celles qui, à l'inverse, doivent attendre l'âge d'annulation de la décote n'ont, réciproquement, pas une meilleure espérance de vie. Historiquement, les catégories de retraités qui ont le plus bénéficié de la retraite au taux plein à 60 ans se situent, quelle que soit la génération, parmi la moitié des retraités dont la pension est la plus élevée. Ces constats interrogent sur le bien-fondé de différences de traitement qui sont aujourd'hui au coeur du système de retraite français. Ils suggèrent que, à moins de trouver une autre justification aux règles actuelles, il pourrait être pertinent de revenir à des modalités plus proches de la philosophie originelle du système, à savoir une prise en compte non seulement de la durée de carrière mais aussi de la durée espérée de retraite dans les règles de départ. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:hal:ipppap:halshs-05042508 |
| By: | Costa-Font, Joan; Raut, Nilesh |
| Abstract: | We examine the impact of the Long-Term Care Insurance Partnership (LTCIP) program—a collaborative initiative between the state-level Medicaid programs and private health insurance companies designed to promote private long-term care insurance (LTCI)—on insurance ownership and Medicaid utilization. We draw on individual-level longitudinal data and employ a difference-in-differences (DD) design adjusted for the staggered implementation of the program between 2005 and 2018. Our results suggest that the rollout of the LTCIP program led to a 1.54 percentage point (pp) (14.7%) increase in LTCI ownership and a 0.82 pp (13.3%) reduction in Medicaid uptake. Our estimates suggest that these combined effects led to an approximate average cost saving of $74 per 65-year-old participant. These findings are explained by a certain degree of substitution between LTCIP and traditional LTCI contracts, ultimately postponing the use of Medicaid benefits. |
| Keywords: | long-term care partnerships; long-term care insurance; Medicaid; United States; difference-in-differences |
| JEL: | I18 H11 H24 |
| Date: | 2025–03–15 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127078 |
| By: | Arno Riedl; Hans Schmeets; Peter Werner |
| Abstract: | Using an artefactual field experiment, we elicit revealed preferences for solidarity of different age groups towards the same and other age groups among a large and heterogeneous sample of the Dutch population. Preferences are elicited with a solidarity game and linked to a rich and unique administrative database, enabling us to explore demographic and socio-economic correlates of the elicited preferences. In the solidarity game a winner of a money amount is asked ex-ante how much they are willing to transfer to a loser who receives no money. We find that participants on average have a strong preference for ex-ante solidarity, as they are willing to transfer about 40% of the money they receive. At the same time, there is a mismatch between belief in solidarity and actual solidarity. Participants are overly pessimistic about what others will transfer. Moreover, we observe age-based discrimination because a significant share of participants exhibits stronger solidarity preferences with their own age group than with other age groups. Using questionnaires, we also measure stated solidarity preferences in various domains and observe that revealed solidarity preferences correlate with some self-reported attitudes about general solidarity. We also correlate revealed solidarity preferences with opinions on social security systems and self-reported field behavior involving solidarity and find some relation between them. |
| Keywords: | solidarity, age groups, group identity, social security systems, large population sample. |
| JEL: | D63 D64 D91 C93 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11841 |
| By: | John Armstrong; James Dalby; Rohan Hobbs |
| Abstract: | We present an architecture for managing Collective Defined Contribution (CDC) schemes. The current approach to UK CDC can be described as shared-indexation, where the nominal benefit of every member in a scheme receives the same level of indexation each year. The design of such schemes rely on the use of approximate discounting methodologies to value liabilities, and this leads to intergenerational cross-subsidies which can be large and unpredictable. We present an alternative approach which we call Collective-Drawdown CDC. This approach does not result in intergenerational cross-subsidies since all pooling is performed by explicit insurance contracts. It is therefore completely fair. Moreover, this scheme results in better pension outcomes when compared to shared-indexation CDC under the same model parameters. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.16892 |
| By: | Burkhard Heer |
| Abstract: | The optimal capital income tax rate has been shown to be nonzero in overlapping generations (OLG) models, as it helps redistribute income between cohorts and individuals with different labor supply elasticities and individual productivities. We show in a medium-scale OLG model that the optimal capital income tax rate is highly sensitive to the assumption of capital-skill complementarity in production technology. The imposition of the production function of Krusell et al. (2000) rather than the standard Cobb - Douglas function increases the optimal capital tax from 9.2% to 27.3% in our benchmark model. We also study the sensitivity of this result in the context of an aging economy and find that the optimal capital income tax increases over the upcoming decades depending on possible pension reforms and debt policies. |
| Keywords: | capital income taxes, Chamley-Judd result, skill-biased technological change, demographic change. |
| JEL: | E13 H21 H24 H25 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11845 |
| By: | Horioka, Charles Yuji |
| Abstract: | The primary objective of this paper is to explore the determinants of the level of, and trends over time in, Japan's household saving rate, with emphasis on the impact of the age structure of the population, and to make projections about future trends therein. The paper finds that Japan's household saving rate has not always been high either absolutely or relative to other countries, contrary to popular belief, and that, if we confine ourselves to the postwar period, it was only during the 25-year period from 1961 to 1986 that it exceeded 15%. Past and future trends in Japan's household saving rate can largely be explained by changes in the age structure of her population, but declines in the saving rate of retired elderly households is a more important explanation for the recent decline in the household saving rate. However, it is likely that other factors such as the unavailability of consumer credit, the unavailability of social safety nets, high rates of economic (income) growth, tax breaks for saving, saving promotion policies, and high and rising land and housing prices are also partial explanations for why Japan's aggregate household saving rate was so high during the 1961-86 period and why it declined so much subsequently. As for future trends in Japan's aggregate household saving rate, it is likely to fall even further though not necessarily at a rapid rate. |
| Keywords: | age structure of the population, household consumption, household saving, Japanese economy, life-cycle hypothesis, population ageing, public pensions, saving promotion, social safety nets, wealth accumulation |
| JEL: | D10 D11 D12 D14 D15 D64 E21 H55 J14 J26 |
| URL: | https://d.repec.org/n?u=RePEc:agi:wpaper:02000144 |
| By: | Eduardo Fraga L. de Melo; Rodrigo S. Targino |
| Abstract: | The methodology for measuring financial assets in defined contribution (DC) pension plans has significant implications whether wealth transfers will occur among participants. In December 2024, a regulatory act was issued for Closed Pension Entities, allowing the use of the hold-to-maturity (HTM) measurement method of treasury bonds in DC plans. This article quantifies the financial impact on participants of adopting HTM valuation in these plans, using real data from the term structure of the real interest rates to assess the resulting wealth transfers. The analysis highlights how HTM valuation creates asymmetries in financial outcomes, benefiting some participants at the expense of others. Wealth transfers occur both during any withdrawal of funds and at the time of contributions, including portfolio reallocations that involve buying or selling bonds. Partial use of HTM or attempts to immunize outflows do not completely eliminate wealth transfers. The results reinforce that the use of mark-to-market (MTM) valuation of assets in DC plans prevents wealth transfers and, consequently, financial losses for participants. O m\'etodo de mensura\c{c}\~ao de ativos financeiros em planos de previd\^encia na modalidade de contribui\c{c}\~ao definida (CD, ou contribui\c{c}\~ao vari\'avel CV, na fase de acumula\c{c}\~ao) tem implica\c{c}\~oes significativas se haver\'a transfer\^encia de riqueza entre os participantes. Em Dez/2024 foi publicada norma para as Entidades Fechadas de Previd\^encia Complementar possibilitando o uso da marca\c{c}\~ao na curva de t\'itulos p\'ublicos federais nos planos CD e CV na fase de acumula\c{c}\~ao. Este artigo quantifica o impacto financeiro nos participantes da ado\c{c}\~ao da marca\c{c}\~ao na curva (HTM {\it Hold to Maturity}) nestes planos, utilizando dados reais da estrutura a termo da taxa de juros de cupom de IPCA para avaliar as transfer\^encias de riqueza resultantes dessa ado\c{c}\~ao. A an\'alise evidencia como a marca\c{c}\~ao na curva gera assimetrias nos resultados financeiros, beneficiando alguns participantes em detrimento de outros. As transfer\^encias de riqueza ocorrem tanto em qualquer retirada de recursos quanto tamb\'em na entrada (contribui\c{c}\~oes), inclusive realoca\c{c}\~oes da carteira que impliquem venda ou compra de t\'itulos. O uso do HTM de forma parcial ou a tentativa de imuniza\c{c}\~ao de sa\'idas n\~ao eliminam por completo transfer\^encias de riqueza. Os resultados refor\c{c}am que, para fins de cotiza\c{c}\~ao, o uso da marca\c{c}\~ao a mercado (MTM {\it Mark to Market}) de ativos em planos CD (e CV na fase de diferimento) evita transfer\^encias de riqueza e, por consequ\^encia, preju\'izos financeiros aos seus participantes. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.08783 |
| By: | Pawel, Samuel; Kutlar, Luisa; Knöpfle, Philipp |
| Abstract: | The original study by Graham et al. (2024) investigated whether loneliness changes with age across the adult lifespan, synthesizing data from nine longitudinal studies via meta-analyses. The primary fi nding was that loneliness follows a U-shaped trajectory: decreasing from young adulthood to midlife and increasing in older adulthood (estimated Age2 regression coeffi cient of 0.07 with 95% confi dence interval from 0.02 to 0.13, age centered at 60 years). We computationally reproduced the reported meta-analyses. We assessed the robustness of the main fi nding with respect to alternative analytic decisions regarding the estimation of the heterogeneity variance and inclusion/exclusion of individual studies. We fi nd that the main claim from Graham et al. (2024) is robust regarding these decisions. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:224 |
| By: | Cartagena-Farias, Javiera; Brimblecombe, Nicola |
| Abstract: | Providing care for longer hours is associated with detrimental effects on carers’ employment and earnings. However, very little is known about carer financial hardship, especially from an intersectional perspective. This study makes use of the UK Household Longitudinal Study to investigate associations between providing care and poverty. Findings show that unpaid carers are more likely to face poverty than non-carers and that this gap has become wider over time. Employment and older age seem to be protective characteristics associated with a lower likelihood of poverty. These findings support the recognition of the many challenges faced by unpaid carers. |
| Keywords: | unpaid/informal carers; poverty; deprivation; inequalities |
| JEL: | J1 R14 J01 |
| Date: | 2025–02–24 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127392 |