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on Economics of Ageing |
| By: | Yann Coatanlem |
| Abstract: | In order to close the competitiveness gap between the U.S. and Europe, particularly in fast-moving technology sectors, firms must have the ability to take elevated risks and reorganize workforces rapidly. However, Germany's strict employment protection regime makes corporate restructuring exceptionally costly. The high “cost of failure” discourages risk-taking, stifles disruptive innovation, and structurally penalizes hiring senior workers. How much does this rigidity actually cost employers, and how can it be mitigated without unraveling Germany's foundational labor protections?To answer these questions, the author of this report constructed a bottom-up cost model using a dataset of 55 large German restructuring programs announced between 2008 and 2025, covering roughly 150, 000 paid exits. The findings are striking: the average cost per exit of restructuring equals 2.49 times an employee's annual salary, driven primarily by expensive early retirement packages and lengthy procedural delays.Addressing this barrier requires targeted legislative action rather than wholesale deregulation. The report proposes a seven-amendment reform package specifically designed for senior high-earners (those with fixed pay above the social security contribution ceiling). By introducing formulaic capped severance, condensing works council notifications to a seven-day window, and shifting incentives away from early retirement, the central estimate suggests that average restructuring costs for this group could be reduced to 1.28 times their annual salary. These reforms, complemented by a Federal Senior Hiring Risk Pool to boost older workforce participation, provide a concrete roadmap to make German restructuring as agile as in flexible economies like Denmark and the U.S. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpr:_59 |
| By: | Elisa Giannone; Yuhei Miyauchi; Nuno Paixao; Xinle Pang; Yuta Suzuki |
| Abstract: | How do depopulation and population aging evolve differently across regions within a country, and what are their implications for aggregate economic activity and regional inequality? Using spatially disaggregated data from Japan over the past several decades, we show that rural areas have experienced significantly faster depopulation and aging than urban areas, driven by low fertility and sustained out-migration of young cohorts. Regions undergoing these trends face declining local amenities and rising per-capita public service costs. To study the future evolution and economic consequences of these dynamics, we develop and calibrate a dynamic life-cycle spatial general equilibrium model. The model predicts widening geographic disparities in depopulation, aging, and economic activity in the coming centuries. While subsidies to declining regions can lower regional inequality, they come at the cost of lower aggregate efficiency and higher public service expenditures. |
| JEL: | E62 J11 O18 R12 R13 R23 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35852 |
| By: | Claus Thustrup Kreiner; Paul Bingley; Benjamin Ly Serena |
| Abstract: | Socioeconomic inequality in longevity is typically measured using a single indicator, such as education or income. When indicators are imperfect proxies for socioeconomic status, this approach understates inequality. Using multiple indicators can improve measurement by better capturing latent socioeconomic status. We combine education, income, occupation, wealth, and IQ scores using machine learning. Using Danish population-wide data spanning 40 years, we estimate life expectancy at age 40 for the 1942-44 birth cohorts. Individuals at the top of the socioeconomic distribution live nearly 25 years longer than those at the bottom. The estimated gradient is 50-150% steeper with multiple indicators. |
| Keywords: | Life Expectancy, Inequality, Machine Learning |
| JEL: | I14 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26234 |
| By: | Zhaojie Ren; Sheng Wang; Tak Kwong Wong; Sheung Chi Phillip Yam |
| Abstract: | This article studies a retirement planning problem from a new perspective in which a retiree delegates an initial lump sum to a professional fund manager. The fund is managed dynamically to deliver lifelong benefits while satisfying a guarantee that, at all times, wealth remains above a prescribed solvency level and the benefit rate remains above a minimum level. We formulate this problem as a continuous-time stochastic control model, in which the controls are the benefit rate and the portfolio allocation, and the objective incorporates general utility functions over benefits, management fees, and terminal bequest. Conventional approaches such as standard viscosity solution and martingale methods are not immediately applicable here due to the simultaneous influence of (i) the control variable nature of the benefit rate; (ii) the guarantee constraints; and (iii) the running wealth-dependent utility. We develop a new approach that deals directly with the associated fully nonlinear Hamilton-Jacobi-Bellman equation and establish the unique existence of a classical solution. One particular trick for resolving this equation is to apply an intricate transform that diverts the former to a semilinear auxiliary equation. A major contribution is to establish the existence of the solution to the auxiliary equation and characterize its precise growth, derivative, and boundary behavior. These results are crucial for establishing the verification theorems and deriving the optimal strategy. Besides, numerical experiments indicate that guarantee constraints induce more conservative policies, particularly at low wealth levels, while providing effective downside protection for both wealth and benefits. The associated well-being loss relative to the unconstrained framework remains small, suggesting that incorporating guarantees into retirement products is practically appealing. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.06504 |
| By: | Betcherman, Gordon; Honorati, Maddalena; Moessinger, Martin |
| Abstract: | While the literature on the minimum wage is largely retrospective, analyzing impacts of past policy changes, this paper is uniquely forward-looking, forecasting how a proposed reform in Ukraine would affect future employment, earnings, and social contributions. The analysis simulates these effects by mimicking a proposal that would set a minimum wage floor equal to 40 percent of the previous year’s average wage once martial law is over and increasing the minimum wage by two percentage points annually until reaching 50 percent of the previous year’s average wage. The analysis draws on a 10 percent random sample of 2023 worker-level data from the Pension Fund of Ukraine, covering all jobs with pension contributions in the private sector and nonmilitary public sector. The results indicate that, under the proposal, by the end of the five-year transition period, the minimum wage would be 45 percent above the level it would have reached if adjusted only for wage inflation, which serves as the counterfactual. Projected job losses would be modest (0.51–1.03 percent), while total earnings would increase by up to 3.24 percent. The effect on social contributions and taxes would be the same as the effect on earnings since they are a fixed percentage of earnings in Ukraine. Applied to an administrative data set covering all formal sector workers, the methodology developed in the paper offers a useful tool for policy makers to anticipate the likely effects of the minimum wage reforms that are being considered. The paper concludes by discussing policy implications. |
| Date: | 2026–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11443 |
| By: | Peter Haan; Julia Schmieder; Izabela Wnuk-Soares |
| Abstract: | We study how immigration affects prices through changes in labor supply. Using policy-driven increases in immigration to Germany and administrative data covering the universe of nursing homes, we find that one additional foreign-born woman per 100 residents reduces nursing-home care prices by 2.6 percent. The price effects are concentrated in more competitive markets. Examining potential mechanisms, we find that immigration lowers labor costs as nursing homes shift toward lower-paid foreign-born workers. We find no evidence of declines in inspection-based measures of quality or of scale effects. Finally, immigration increases the use of informal care, potentially strengthening competitive pressure from the broader care market. |
| Keywords: | Immigration, labor supply, prices, nursing homes |
| JEL: | J61 F22 J30 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26224 |
| By: | Isabella Mantel; Regina T. Riphahn |
| Abstract: | Demographic aging causes substantial worker shortages. So far, policy debates neglect the aspect of age at labor market entry. We study the age at which young individuals first enter the labor market and how it has developed over the last four decades. Based on long-running administrative data, we describe birth cohorts from 1960 through 2000, and separately consider different types of employment entry. We investigate the entry age distribution and heterogeneities across demographic groups. We find that conditional on employment, the median age of first holding a stable full-time employment increased by almost 4 years between the birth cohorts 1960 and 1995. Our decomposition analysis yields that more than one quarter of this increase is explained by higher educational attainment and the rising share of non-German workers, which appear to be the main mechanisms behind the delay in labor market entry. Additionally accounting for changed occupations, industry composition, and relative entry-level earnings explains about 40 percent of the observed delay in labor market entry. The role of different mechanisms varies across the types of employment entry. |
| Keywords: | demographic aging, age at labor market entry, administrative data |
| JEL: | J11 J21 I28 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bav:wpaper:250_mantel_riphahn.rdf |