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on Economics of Ageing |
| By: | Vanya Horneff; Raimond Maurer; Olivia S. Mitchell; Julius Odenbreit |
| Abstract: | Nursing home costs in the United States now exceed $100, 000 per year, and government assistance programs such as Medicaid help out only when retirees are largely destitute. Moreover, health shocks driving the need for such care can arise suddenly in old age, are frequently permanent in nature, and can be associated with declining mental and physical abilities. These facts raise the important question of how households can best prepare to finance this final phase of life. Building on past research, we determine how retirees should manage payouts from defined contribution plans to balance trade-offs between consumption and health care cost shocks, using both retirement plan assets and annuitization. Our analysis explicitly integrates the role of taxes, required minimum distributions, bequest motives, and the possibility of retiree insolvency. We conclude that payout annuities, especially deferred and variable annuities, can be quite valuable for retirees, even when they face health shocks in later life. |
| JEL: | D15 G11 G51 G53 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34460 |
| By: | Bertrand Gruss; Eric Huang; Andresa Helena Lagerborg; Diaa Noureldin; Galip Kemal Ozhan |
| Abstract: | This paper provides new cross-country evidence on healthy aging—the extent to which populations age in better health across successive birth cohorts—and how this shapes labor market outcomes for older workers. Using harmonized microdata on individuals aged 50 and above in 41 countries over 2000-22, we document that physical, cognitive, and mental health have improved systematically across cohorts. To estimate causal effects, we instrument individual health with chronic disease incidence. Better health increases labor supply along both the extensive and intensive margins and raises labor earnings and labor productivity. The results are economically significant: a decade of cohort health gains in cognitive abilities raised older individuals’ labor force participation by about 20 percentage points, weekly hours by around 6, productivity by roughly 30 percent, and total labor earnings by roughly 35 percent. These results suggest that healthy aging can meaningfully bolster labor supply and productivity among older workers, mitigating demographic headwinds for growth and public finances. |
| Keywords: | Population aging; demographic change; healthy aging; labor markets |
| Date: | 2025–11–07 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/229 |
| By: | Cecchini, Simone; Comelatto, Pablo; Holz, Raúl; Kang, Seongji; Paes, Yaël |
| Abstract: | This document analyses the economic implications of rapid population ageing in Latin America and the Caribbean, highlighting both the challenges it poses for economic growth, the labour market, and the sustainability of social policies, as well as the opportunities it presents to boost various economic sectors in the region. Based on demographic and economic data, the ongoing structural transformation is examined, with particular emphasis on the increase in the population aged 65 and over. The study reviews the conceptual approaches that enable an understanding of the various dimensions of ageing in relation to production, consumption and intergenerational transfers, such as the silver economy, the longevity economy, and the generational economy. Sectors with potential for economic growth in the context of population ageing have been identified, including health care, caregiving, the pharmaceutical industry, the financial sector, technology, tourism, and adapted housing. Through the analysis of the demographic dividend and the use of the National Transfer Accounts (NTA) methodology, the document assesses the projected impacts of ageing on economic growth and highlights the role of productivity and labour force participation —particularly among women and older persons— as key factors to mitigate these effects. The study also examines innovative public policies in the Republic of Korea and other countries worldwide that may serve as benchmarks for Latin America and the Caribbean. The document concludes that seizing the economic opportunities of population ageing requires incorporating demographic change into public policies, investing in health, social protection, and care systems, as well as recognizing the rights and contributions of older persons, from a life-cycle perspective. |
| Date: | 2025–10–14 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col045:82540 |
| By: | David Boisclair; Xavier Dufour-Simard; Pierre-Carl Michaud |
| Abstract: | We analyze the effect on savings in registered vehicles—including the VRSP itself—of the Voluntary Retirement Savings Plans Act (VRSP) Act, adopted in 2014, and the employer mandate to offer a workplace retirement savings vehicle. We use two identification strategies: a difference-in-differences approach (province × year) and a triple-difference approach (province × public sector × year), both applied to tax return data from the Longitudinal Administrative Databank (LAD). Our results suggest a gradual increase—of up to 4 percentage points—in the share of taxpayers contributing to a registered vehicle as a result of the law’s implementation. We estimate that the contribution rate to these vehicles, as a share of wages, rose by up to 0.6 percentage points. We find a net average increase of 0.4 percentage points in registered savings between 2017 and 2022 attributable to the VRSP Act, with gains concentrated among higher-income workers. We discuss potentialimprovements to better encourage saving among workers who need to save for retirement beyond the public plans. Nous analysons l’effet sur l’épargne dans des véhicules enregistrés – incluant le RVER lui- même – de la Loi sur les régimes volontaires d’épargne-retraite (Loi RVER), adoptée en 2014, et de l’obligation pour les employeurs d’offrir un véhicule d’épargne retraite. Nous utilisons deux stratégies d’identification : une approche en double différence (province x année) et une en triple différence (province x secteur public x année), toutes deux appliquées aux données sur les déclarations fiscales de la Base de données administratives longitudinales (DAL). Nos résultats suggèrent une augmentation graduelle, allant jusqu’à 4 points de pourcentage, de la proportion de contribuables ayant cotisé à un véhicule enregistré en raison de la mise en œuvre de la loi. Nous estimons que le taux d’épargne vers ces véhicules, en pourcentage du salaire, a connu une augmentation allant jusqu’à 0, 6 point de pourcentage. Au net, nous estimons une hausse moyenne de l’épargne enregistrée de 0, 4 point de pourcentage entre 2017 et 2022 des suites de la mise en place de la Loi RVER, hausse qui semble concentrée chez les travailleurs à revenu plus élevé. Nous discutons de pistes d’améliorations possibles dans le but de favoriser l’épargne chez les travailleurs ayant un besoin d’épargner pour la retraite au-delà des régimes publics. |
| Keywords: | savings, retirement, pensions, épargne, retraite, pensions |
| JEL: | G51 G53 E21 J32 |
| Date: | 2025–11–04 |
| URL: | https://d.repec.org/n?u=RePEc:cir:cirwor:2025s-31 |
| By: | Bertermann, Alexander (LMU Munich); Dauth, Wolfgang (Institut für Arbeitsmarkt- und Berufsforschung); Suedekum, Jens (Heinrich Heine University Düsseldorf); Woessmann, Ludger (University of Munich) |
| Abstract: | How do firms and workers adjust to trade and technology shocks? We analyze two mechanisms that have received little attention: training that upgrades skills and early retirement that shifts adjustment costs to public pension systems. We combine novel data on training participation and early retirement in German local labor markets with established measures of exposure to trade competition and robot adoption. Results indicate that negative trade shocks reduce training—particularly in manufacturing—while robot exposure increases training—particularly in indirectly affected services. Both shocks raise early retirement among manufacturing workers. Structural change thus induces both productivity-enhancing and productivity-reducing responses, challenging simple narratives of labor market adaptation and highlighting the scope for policy to promote adjustment mechanisms conducive to aggregate productivity. |
| Keywords: | workers, firms, robots, automation, technological change, trade, retirement, training, labor market |
| JEL: | J24 J26 O33 F16 R11 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18247 |
| By: | Geoffrey T. Sanzenbacher |
| Abstract: | The brief’s key findings are: (1) The Earned Income Tax Credit (EITC) encourages low-income people with kids to work – those without kids get a much smaller credit.(2) Previous EITC research has focused on younger households, but some analysts suggest an expanded childless credit could boost work among near retirees.(3) This study finds that raising the EITC by $1, 000 would produce a modest rise in employment among single women ages 55-64.(4) However, this impact is much smaller than that for younger single women, perhaps because older women have higher earnings or more health limitations.(5) Thus, an expanded EITC would primarily benefit younger workers, though with a positive side effect for at least some older workers too. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:crr:issbrf:ib2025-7 |
| By: | Paul Bingley; Claus Thustrup Kreiner; Benjamin Ly Serena |
| Abstract: | Socioeconomic inequality in longevity is typically measured using a single socioeconomic indi-cator such as education or income. We combine multiple indicators—education, income, occu-pation, wealth, and IQ scores—and apply machine learning to measure inequality in longevity. Using Danish population-wide data spanning 40 years, we track mortality for the 1942–44 birth cohorts from age 40 onwards to estimate life expectancy by socioeconomic status. Individuals at the top of the socioeconomic distribution live nearly 25 years longer than those at the bottom. The socioeconomic gradient in life expectancy becomes 50–150% steeper when using multiple indicators. |
| Keywords: | life expectancy, inequality, machine learning |
| JEL: | I14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12249 |
| By: | John Armstrong; Cristin Buescu; James Dalby; Rohan Hobbs |
| Abstract: | We use a neural network to identify the optimal solution to a family of optimal investment problems, where the parameters determining an investor's risk and consumption preferences are given as inputs to the neural network in addition to economic variables. This is used to develop a practical tool that can be used to explore how pension outcomes vary with preference parameters. We use a Black-Scholes economic model so that we may validate the accuracy of network using a classical and provably convergent numerical method developed using the duality approach. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.07045 |
| By: | Marius Brülhart; Aurélien Eyquem; Isabel Z. Martínez; Enrico Rubolino; Enrico Rubolino |
| Abstract: | We study how inheritance affects labor supply over the life cycle, and we quantify its aggregate impact. Tracking earnings histories around some 135, 000 inheritances and 5, 000 lottery wins, we exploit the quasi-random timing and size of these events to identify labor supply responses with high precision. Earnings responses are negative at all ages but peak between ages 55 and 64, largely due to early retirement. Inheritances generate smaller impact responses than comparable lottery wins, consistent with anticipation effects. Our estimates match the predictions of a life-cycle model with endogenous labor supply and early retirement. Aggregating model-based responses across the population, our point estimate of the GDP cost of inheritance is 1.1%. The timing, size, and anticipation of inheritance all contribute to shaping its macroeconomic consequences. |
| Keywords: | inheritance, labor supply, lottery wins, life-cycle effects |
| JEL: | J22 D31 D64 G51 H31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12255 |
| By: | Connor, Dylan; Sheehan, Connor; Jang, Jiwon; Kemeny, Tom; Suss, Joel; Molina, Mercedes; Xie, Siqiao; Gu, Zhining; Saenz, Joseph |
| Abstract: | Using a new database on the net worth and self-reported cognitive impairment for almost two million adults, this paper provides the first large-scale evidence linking community wealth to age-related cognitive decline. This assessment is timely as widening geographic wealth gaps in the USA fuel disparities in access to public goods and amenities, positioning community wealth as a critical determinant of cognitive health. Conditioning on personal wealth and other risk factors, we find that a standard deviation increase in community wealth is associated with a 6.7% relative risk reduction in cognitive impairment across the national population of older adults, rising to 13.7% for those residing in the poorest fifth of communities. Community wealth matters more than relative inequality, and its associated protective effects are larger for non-white, non-college educated, and low net worth householders. This is plausibly because these individuals rely more on the public goods and services underwritten by local affluence. The economic fragmentation of American communities thus poses a growing threat to the cognitive health of Americans, especially among those from socially vulnerable and marginalized backgrounds |
| Date: | 2025–10–29 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:fpcr5_v1 |
| By: | Zhiguang Li (School of Economics and Management, Anhui University of Chinese Medicine and Key Laboratory of Data Science & Innovative Development of Traditional Chinese Medicine, Philosophy and Social Sciences of Anhui Province, Hefei, Anhui China); Yanrui Wu (University of Western Australia Business School, Perth, Australia); Fan Zhang (School of Economics and Management, Anhui University of Chinese Medicine, Hefei, Anhui China); Yuqing Zhang (School of Economics and Management, Anhui University of Chinese Medicine, Hefei, Anhui China) |
| Abstract: | This article examines the nexus between government attention to pension affairs, characteristics of officials-in-charge and performance or efficiency of China’s public pension funds (PPFs). It uses the fuzzy set qualitative comparative analysis and data of government attention to pension affairs and characteristics of PPF officials from 20 provinces during the period of 2015-2019. The research results show that four configurations namely promotion-driven, resource-endowment-driven, government-led and seniority & localization-empowerment pathway are associated with high efficiency of PPFs. There are also four configurations namely poor professionalism, working efficiency stagnation, lack of local emotional attachment, and policy failure which lead to low efficiency. In addition, the high or low level of efficiency is the result of multiple factors working together rather than a single dominant factor. The professionalism, relevant working experience and local emotional attachment of the officials in charge of PPFs could compensate for the institutional gap due to low government attention to pension affairs. Furthermore, there exists a potential substitution relationship among factors that affect the performance of PPFs. Finally, the efficiency of PPFs is influenced by multiple complex factors that vary significantly across both temporal and spatial dimensions. Policy design should take into account of the diversity of regional economic development levels, official characteristics, and local institutional environments so that flexible and targeted management approaches are adopted to promote the efficient operation of PPFs. Policy makers should pay attention to temporal factors and regional disparities and formulate flexible and adaptive governance strategies tailored to the specific conditions and characteristics of individual provinces. |
| Keywords: | Public pension funds, Efficiency, Government attention, Official characteristics, fsQCA, Dynamic QCA, China |
| JEL: | H55 J32 D73 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:uwa:wpaper:25-10 |
| By: | Vishaal Baulkaran; Pawan Jain |
| Abstract: | Financial literacy allows financial planners to provide unbiased and relevant recommendations to their clients as well as help them to mitigate clients’ behavioral biases. By recognizing clients’ behavioral biases, financial planners can take steps to mitigate their effects and make more rational and effective decisions (Barber and Odean, 2000; Shefrin and Statman, 1985; Huberman, 2001, Baulkaran and Jain, 2024). Financial planners’ ability to mitigate clients’ behavioral biases will likely increase with a greater degree of financial literacy. Financial literacy in the context of home equity release schemes refers to the planner's ability to understand the nuances of these products, assess their suitability for different client profiles, and communicate the associated risks and benefits effectively to clients (Baulkaran and Jain, 2024 and Baulkaran and Jain, 2023). Baulkaran and Jain (2024) highlights that while financial planners are generally knowledgeable, they may still fall prey to behavioral biases that can influence their recommendations. Given that financial literacy is paramount in financial planning and advising services, we examine financial planners’ knowledge of home equity release options. We show that financial planners’ total financial literacy score across different home equity release options is 64%, with the 75th percentile score being approximately 79%. Financial planners appeared to underestimate their knowledge. For example, 54% of planners rank their knowledge of reverse mortgages as very high to extremely high compared to an average score of 60% for reverse mortgage questions. Using Tobit regression, we show that several demographic characteristics explain financial literacy total scores as well as reverse mortgage scores. Also, we show that financial planners with high overconfidence bias scored less on the literacy questions. Finally, the planners specializing in retirement planning tend to have a high literacy score. |
| Keywords: | Financial Literacy, ; Financial Planners, ; Home Equity |
| JEL: | R3 |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2025_236 |