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on Economics of Ageing |
| By: | Abdoulaye Ndiaye (New York University); Zhixiu Yu (Louisiana State University) |
| Abstract: | Raising the retirement age is a common policy response when social security schemes face fiscal pressures. We develop and estimate a dynamic life cycle model to study optimal retirement and tax policy when individuals face health shocks and income risk and make endogenous retirement decisions. The model incorporates key features of Social Security, Medicare, income taxation, and savings incentives and distinguishes three channels through which health affects retirement: nonconvexities in labor supply due to health-dependent fixed costs of working, earnings reductions, and mortality risk. We estimate our model to match US microdata and show that labor supply nonconvexities play a dominant role in driving early retirement, making rigid increases in the retirement age welfare reducing. In contrast, more flexible policies, such as increasing the dependence of Social Security benefits on the claiming age, can improve welfare and pay for themselves with a fiscal surplus. We map a range of policy reforms to their marginal values of public funds (MVPFs), showing that certain incentives to delay claiming offer MVPFs of infinity while broad-based retirement age increases have negative willingness-to-pay. These findings offer novel retirement policy prescriptions and challenge the prevailing emphasis on raising the retirement age. |
| Keywords: | dynamic models, Medicare, income taxation, savings, Labor Supply, marginal value of public funds, MVPF, willingness to pay |
| JEL: | J26 H55 H21 I10 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:hka:wpaper:2025-005 |
| By: | Vandenberghe, Vincent |
| Abstract: | The primary policy response to population ageing in advanced economies has been to raise the mandatory retirement age. However, these policies have reignited calls for differentiated retirement ages that take into account variations in work intensity. This paper utilises microdata to examine the relevance and feasibility of this concept in Europe. It first quantifies career arduousness using SHARE wave 7 retrospective ISCO4-digit data on careers in combination with US O*NET working conditions data. Then, using SHARE follow-up data collecting (bad)health and death information about wave 7 respondents, it estimates (healthy) life expectancy by career arduousness decile, combining econometrics and life table methods. Findings reveal a life expectancy gap between the least and most arduous careers of 4 to 4.2 years. Healthy life expectancy differences are slightly larger, ranging from 6.9 to 9.1 years. Also, women's healthy life expectancy seems to be somewhat more impacted by arduousness. |
| Keywords: | Ageing, Career arduousness, (Healthy) life expectancy, Retirement Policy |
| JEL: | J14 I1 J26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1627 |
| By: | Vera-Cossio, Diego A.; Bosch, Mariano; Leganza, Jonathan M; Mojica Uruena, Tatiana; Oliveri, María Laura |
| Abstract: | We study how public pensions impact lifecycle labor supply decisions. Our analysis centers on pension eligibility rules in Ecuador. We first use administrative data to document and unpack retirement spikes at eligibility ages. Next, we use survey data and regression discontinuity to investigate whether eligibility rules influence earlier-in-life decisions about when to work formally versus informally. We find discontinuous increases in transitions to formal employment at 50, consistent with forward-looking people timing employment to minimize social security contributions while maintaining benefit eligibility. Evidence suggests that small and family firms, where employees and employers may readily coordinate, help facilitate these transitions. |
| JEL: | H55 J26 J46 O12 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14165 |
| By: | Schüler, Ruth M.; Seele, Stefanie |
| Abstract: | Erreichen gesetzlich Rentenversicherte 35 oder 45 Jahre an anrechenbaren Zeiten, dürfen diese Personen ab einem Alter von 63 Jahren oder maximal zwei Jahre vor ihrer individuellen Regelaltersgrenze vorzeitig, das heißt früher als zu ihrer individuellen Regelaltersgrenze, ihre Altersrente beziehen. Personen mit 35 Jahren anrechenbarer Zeiten sind langjährig versichert und müssen bei vorzeitigem Rentenbezug Abschläge auf ihren bis dahin erreichten Rentenanspruch in Kauf nehmen. Nach einer Versichertenzeit von 45 Jahren wird die vorgezogene Rente besonders langjährig Versicherten abschlagsfrei gewährt. Die Altersrente für besonders langjährig Versicherte wird häufig noch "Rente mit 63" genannt, obwohl das Mindestalter für den Bezug einer vorzeitigen, abschlagsfreien Rente schrittweise angehoben wird und mit Vollendung der Anhebung der Regelaltersgrenze im Jahr 2031 65 Jahre betragen wird. Der Gesetzgeber hat die Hinzuverdienstgrenze für langjährig und besonders langjährig Versicherte seit 2020 zweimal befristet erhöht und zum Jahresbeginn 2023 endgültig abgeschafft. Ziel der Reformen ist es, die Erwerbstätigkeit dieser beiden Rentengruppen auszuweiten und damit demografisch bedingte Fachkräfteengpässe zu dämpfen. Vor den Reformen galt eine geringfügige Beschäftigung für (besonders) langjährig Versicherte als finanziell attraktiv, da bei einer Beschäftigung über diesen Umfang hinaus ein sozialversicherungspflichtiger Hinzuverdienst zu 40 Prozent mit der Altersrente verrechnet wurde. Dennoch arbeitete schon in den Jahren 2018 und 2019 ein kleiner Anteil der (besonders) langjährig Versicherten neben der Rente über eine geringfügige Beschäftigung hinaus und nahm die Anrechnung des Hinzuverdiensts auf die Altersrente in Kauf. Im Folgenden wird diese Beschäftigung neben der Rente als großer Hinzuverdienst bezeichnet. In dieser Analyse werden die drei Reformschritte als ein natürliches Experiment verstanden, bei welchem die Betroffenengruppen aus (besonders) langjährig Versicherten mit der Gruppe der Regelaltersrentnerinnen und -rentner verglichen werden. Bei den besonders langjährig versicherten Frauen, welche erstmals eine Altersrente bezogen, stieg der Anteil mit großem Hinzuverdienst von 2019 (vor den Reformen) auf 2023 (nach den Reformen) um 14, 1 Prozentpunkte. Der Anstieg bei den Regelaltersrentnerinnen, welche schon vor den Reformen unbegrenzt hinzuverdienen konnten, betrug im gleichen Zeitraum lediglich 2, 3 Prozentpunkte. Aus dem Vergleich der von der Reform betroffenen Gruppe der besonders langjährig Versicherten Frauen mit der nicht betroffenen Gruppe der Regelaltersrentnerinnen ergibt sich die sogenannte doppelte Differenz von 11, 8 Prozentpunkten. Bei den besonders langjährig versicherten Männern stieg im gleichen Zeitraum der Anteil der Rentner mit großem Hinzuverdienst um 12, 1 Prozentpunkte gegenüber der flacheren Entwicklung bei den Regelaltersrentnern. Die langjährig Versicherten zeigen ein ähnliches Muster, welches jedoch weniger dynamisch ist. Der Anstieg konzentriert sich hier vor allem auf das Jahr 2023 nach der vollständigen Abschaffung der Hinzuverdienstgrenze. (Besonders) langjährig Versicherte nehmen also seit den Reformen häufiger die Möglichkeit wahr, neben der Rente hinzuzuverdienen. Lineare Regressionen zeigen überdies, dass sie im Durchschnitt in einem größeren Umfang hinzuverdienen als vor der Reform. Unklar bleibt, ob diese Hinzuverdienstausweitung einen Mitnahmeeffekt inkludiert, das heißt einen früheren Renteneintritt bei parallelem (ohnehin geplanten) Weiterarbeiten anstößt. Wenn Renteneintritte durch die Möglichkeit des unbegrenzten Hinzuverdiensts vorgezogen würden, würde dies eine erhebliche finanzielle Belastung für die Gesetzliche Rentenversicherung bedeuten. Dies erfordert weitere empirische Untersuchungen, im Besonderen mit Blick auf Verhaltensänderungen beim individuellen Arbeitsangebot. |
| Abstract: | If statutory pensioners reach 35 or 45 years of creditable periods, they may draw their old-age pension early, i.e. earlier than their individual standard retirement age, from the age of 63 or a maximum of two years before their individual standard retirement age. Persons with 35 years of qualifying periods are insured for many years and must accept reductions on their pension entitlement if they draw their pension early. After an insured period of 45 years, the early pension is granted without deductions to those with particularly long insurance periods. The old-age pension for particularly long-term insured persons is often still referred to as 'pension at 63', although the minimum age for drawing an early pension without deductions is gradually being raised and will reach 65 years in 2031 when the standard retirement age reaches 67 years. Legislators have increased the supplementary income limit for long-term and particularly long-term insured persons twice for a limited period since 2020 and abolished it permanently at the start of 2023. The aim of the reforms is to increase the employment of these two pension groups and thus alleviate demographically induced skills shortages. Before the reforms, marginal employment was considered financially attractive for (particularly) long-term insured persons, as 40 per cent of additional earnings subject to social insurance contributions were offset against the old-age pension if they worked beyond this level. Nevertheless, in 2018 and 2019, a small proportion of people with (particularly) long-term insurance worked above the marginal employment threshold in addition to their pension and accepted the additional earnings being offset against their old-age pension. In the following, this employment above marginal employment is referred to as large additional earnings. In this analysis, the three reform steps are understood as a natural experiment in which the affected groups of (particularly) long-term insured persons are compared with the group of standard oldage pensioners who could earn in addition to their pensions even before the reform took place. Among women with particularly long insurance periods who were drawing an old-age pension for the first time, the proportion with large additional earnings rose by 14.1 percentage points from 2019 (before the reforms) to 2023 (after the reforms). The increase among standard old-age pensioners, who were already able to earn unlimited additional income before the reforms, was only 2.3 percentage points in the same period. A comparison of the group of women with particularly long-term insurance treated by the reform with the untreated group of regular old-age pensioners shows the so-called difference-in-difference of 11.8 percentage points. In the same period, the proportion of pensioners with large additional earnings rose by 12.1 percentage points among men with particularly long-term insurance compared with the flatter trend among pensioners who retired at standard retirement age. Those with long-term insurance show a similar pattern, although it is less dynamic. The increase here is mainly concentrated in 2023 after the complete abolition of the supplementary income limit. Since the reforms, (particularly) long-term insured persons have therefore more frequently taken advantage of the opportunity to earn additional income alongside their pension. Linear regressions also show that, on average, they earn more supplementary income than before the reform. It remains unclear whether this increase in supplementary income includes a windfall effect, i.e. whether it would trigger earlier retirement while continuing to work (as planned anyway). If retirements were brought forward by the possibility of unlimited additional earnings, this would mean a considerable financial burden for the statutory pension insurance scheme. This requires further empirical studies, particularly with regard to behavioural changes in individual labour supply. |
| JEL: | H55 J14 J26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwkrep:319630 |
| By: | Michael D. Bates; Andrew C. Johnston |
| Abstract: | Theoretical rationales for employer-provided pensions often focus on their ability to increase employee effort and selectively retain quality workers. We test these hypotheses using rich administrative data on public school teachers around the pension-eligibility threshold. When teachers cross the threshold, their effective compensation drops by over 50 percent of salary due to sharply reduced pension accrual rates. Standard economic models predict this compensation reduction should decrease teacher effort and output, yet we observe no such decline. This suggests that yearly pension accruals near retirement do not meaningfully increase effort. Similarly, if pensions selectively retained better teachers, we would expect average teacher quality to decline when the retentive incentive disappears at the threshold. Instead, we find no change in the composition of teacher quality, suggesting pensions do not selectively retain higher-performing workers in late career. |
| JEL: | H55 I21 J33 J45 M52 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33986 |
| By: | Albert, Jose Ramon (Asian Development Bank); Martinez Jr., Arturo (Asian Development Bank); Kikkawa, Aiko (Asian Development Bank); Park, Donghyun (Asian Development Bank); Estrada, Gemma (Asian Development Bank); Umali, Mar Andriel (Asian Development Bank); Bulan, Joseph Albert Niño (Asian Development Bank) |
| Abstract: | This study provides a comprehensive analysis of poverty trends among older people in the Philippines, using various data sources. It analyzes both monetary and multidimensional measures of poverty, as well as income sources, expenditure patterns, asset ownership, and living arrangements among older households. The findings reveal complex dynamics and nuanced patterns of poverty among older people, highlighting the limitations of traditional metrics in capturing the full scope of this age group’s economic vulnerability. Key findings include the reliance of many older households on remittances, higher spending on essentials like food and health care, and generally lower asset ownership compared to other households. The study also examines the impact of the coronavirus disease pandemic and discusses policy implications for addressing poverty among older people in the Philippines. |
| Keywords: | poverty; older people; Philippines |
| JEL: | I32 J11 J14 |
| Date: | 2025–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:0789 |
| By: | Miguel-Angel Lopez-Garcia (Department of Applied Economics, Universitat Autònoma de Barcelona) |
| Abstract: | This paper deals with the interactions between, on the one hand, the provision of public retirement pensions and the episodes of real-estate booms, and, on the other, individual decisions concerning savings. It explores the implications of these interactions in terms of intergenerational transfers of income and wealth, and the ensuing effects on the evolution of the savings rate. Some reforms of social security financing, involving public capital funds, and the effects of savings and investment incentives addressed to owner-occupied housing, are analysed. |
| Keywords: | social security pensions; capital funds; owner-occupied housing; savings and investment incentives; savings motives. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:uab:wprdea:wpdea2504 |
| By: | Hyeongsuk Kim; Chulhee Lee; Karen Eggleston |
| Abstract: | Korea’s labor force shift toward older, female, and more educated workers has been even more dramatic than that of the US in recent decades. This paper documents how Korean job characteristics vary by age and characterizes the “age-friendliness” of Korean employment from 2000 to 2020 by applying the Age-Friendliness Index (AFI) developed by Acemoglu, Mühlbach and Scott to Korean occupational data. The AFI measures job characteristics—such as physical demands and job autonomy—based on occupational descriptions and worker preferences. Our primary empirical findings are that the age-friendliness of Korean jobs grew more slowly than in the US, and that older Koreans were not the main beneficiaries of these jobs. Both findings reflect the demographic, labor market, and institutional differences between Korea and the US. Slow growth of AFI can be partially explained by labor market rigidities, the role of large firms in Korea, and the flattening of managerial structures. |
| JEL: | I0 J1 J20 J32 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33813 |
| By: | Moradhvaj Dhakad; Samir KC |
| Abstract: | The mortality status across the population is determined by its level of socioeconomic development. Education significantly impacts a population's health and lifespan, with more educated individuals tending to live longer than their less-educated counterparts. However, the impact of education on mortality may differ across countries, and the evidence on mortality by educational attainment is primarily limited to low-mortality countries. Understanding mortality differentials by educational attainment is critical for social and health policy formation, and for comprehending the current and future prospects of the population. The Wittgenstein Centre (WIC) population projections in 2013 (WIC2013) and 2018 (WIC2018) assumed standardised mortality differentials by educational attainment based on evidence from a limited number of countries. The updated WIC global population projections in 2023 (WIC2023) now account for age-sex-specific heterogeneity in mortality and migration by educational attainment. This paper describes the data and methods used to estimate mortality by educational attainment in the base year globally. Finally, we analyse mortality patterns by educational attainment for males and females across countries using multiple data sources. |
| Keywords: | Mortality, education |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:vid:wpaper:2402 |