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on Economics of Ageing |
| By: | Malavasi, Chiara (ZEW Mannheim); Ye, Han (University of Mannheim) |
| Abstract: | We estimate the effect of additional pension income on mortality outcomes by exploring the eli- gibility criteria of a German program subsidizing the pensions of low-wage workers. Using novel administrative data, we find that eligibility leads to a 2-month delay in age at death (censored at 75). Survey evidence suggests that additional pension income improves both mental and physical health. In addition, individuals feel less financially constrained and are more optimistic about their future. Heterogeneity analysis indicates that the results are mainly driven by men. |
| Keywords: | mortality, health, income, pension subsidy, retirement |
| JEL: | I10 I12 J14 J26 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17024&r= |
| By: | Delalibera, Bruno Ricardo; Ferreira, Pedro Cavalcanti; Parente, Rafael Machado |
| Abstract: | In many countries, the regulations governing public and private pension systems, hiring procedures, and job contracts differ. Public sector employees tend to have longer tenures and higher wages compared to workers in the private sector. As such, social security reforms can affect both retirement decisions and sectoral choices. We study the effects of social security reforms on retirement and sectoral behavior in an economy with multiple pension systems. We develop a general equilibrium life-cycle model with three sectors - private formal, private informal and public - and endogenous retirement. In a model calibrated to Brazil, we quantitatively assess the long-run effects of reforms being discussed and implemented across countries. Among them, we study the unification of pension systems and increasing the minimum retirement age. We find that these reforms affect the decision to apply to a public job, the profile of savings over the life cycle, and informality. In the long run, these reforms lead to higher output and capital, reduced informality, and average welfare gains. They also drastically reduce the social security deficit |
| Date: | 2024–05–29 |
| URL: | https://d.repec.org/n?u=RePEc:fgv:epgewp:842&r= |
| By: | Pablo GARCIA SANCHEZ (Banque Centrale du Luxembourg); Luca MARCHIORI (Banque Centrale du Luxembourg); Olivier PIERRARD (Banque Centrale du Luxembourg) |
| Abstract: | We propose a two-period overlapping generation economy that incorporates health investment in preventive measures during youth. These preventive measures contribute to increased longevity and reduced frailty, which influence old-age dependency and pension costs. As these costs are partly funded through pay-as-you-go social security contributions, investment in prevention creates externalities for the next generation. We analytically determine the optimal level of prevention and characterize the optimal health policy that a government should implement to achieve it. Our findings reveal that the optimal subsidy to long-term care exceeds the optimal subsidy to preventive measures. Furthermore, both subsidies are inversely related to the generosity of the public pension scheme. We explore the robustness of our results through various extensions and demonstrate their consistency with several patterns observed in cross-country OECD data. |
| Keywords: | Health, Prevention, Optimal Ramsey policy, Overlapping generations |
| JEL: | H23 I18 O41 |
| Date: | 2024–06–10 |
| URL: | https://d.repec.org/n?u=RePEc:ctl:louvir:2024008&r= |
| By: | Adam Bee; Irena Dushi; Joshua Mitchell; Brad Trenkamp |
| Abstract: | Research has shown that household survey estimates of retirement income (defined benefit pensions and defined contribution account withdrawals) suffer from substantial underreporting which biases downward measures of financial well-being among the aged. Using data from both the redesigned 2016 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) and the Health and Retirement Study (HRS), each matched with administrative records, we examine to what extent underreporting of retirement income affects key statistics such as reliance on Social Security benefits and poverty among the aged. We find that underreporting of retirement income is still prevalent in the CPS ASEC. While the HRS does a better job than the CPS ASEC in terms of capturing retirement income, it still falls considerably short compared to administrative records. Consequently, the relative importance of Social Security income remains overstated in household surveys—53 percent of elderly beneficiaries in the CPS ASEC and 49 percent in the HRS rely on Social Security for the majority of their incomes compared to 42 percent in the linked administrative data. The poverty rate for those aged 65 and over is also overstated—8.8 percent in the CPS ASEC and 7.4 percent in the HRS compared to 6.4 percent in the linked administrative data. Our results illustrate the effects of using alternative data sources in producing key statistics from the Social Security Administration’s Income of the Aged publication. |
| Keywords: | measurement error, household surveys, retirement income; Social Security; poverty, aging |
| JEL: | H31 H55 I32 J14 J26 R29 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:24-32&r= |
| By: | Bustos, Emil (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Aging populations strain pension systems, prompting policymakers to introduce partial retirement schemes to incentivize workers to retire later. I study the impact of introducing partial retirement within collective bargaining agreements in Sweden’s manufacturing sector in 2013. Merging collective bargaining data with administrative records, I employ a difference-in-differences methodology to analyze the labor market trajectories of eligible and ineligible cohorts around the introduction year. The results reveal a nuanced picture: while eligible workers are more likely to work and claim pension benefits simultaneously, this comes at the expense of a 10% decline in employment rates and a SEK 50, 000 reduction in labor earnings. In summary, partial retirement fails to extend working lives, thus undermining its utility as a one-size-fits-all solution to the future of pension systems. |
| Keywords: | Partial Retirement; Pension; Labor Supply |
| JEL: | D15 J26 J32 |
| Date: | 2024–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1495&r= |
| By: | Breyer, Friedrich; Breunig, Christian; Kapteina, Mark; Schwerdt, Guido; Sterba, Maj-Britt |
| Abstract: | Citizens and politicians rely on their knowledge of a pension system, particularly its redistributive features, when forming their preferences and evaluating its fairness. Taking advantage of the Bismarckian rule of proportionality in Germany, we provide experimental and survey-based evidence indicating that voters and politicians adjust their preferences and perceptions of fairness when new information becomes available. Information on the proportional character of the pension system increases perceived fairness and decreases redistributive demands, whereas information about inequalities in life expectancy between beneficiary groups lowers perceived fairness and increases the demand for redistribution. Both citizens and politicians reject the Bismarckian principle of strict proportionality between lifetime contributions and pension benefits in favor of more redistribution from high to low earners in the retirement phase. Our design utilizes a representative survey of citizens and state politicians in 2020-22. |
| Keywords: | public pensions, preferences, redistribution, Germany, elites |
| JEL: | H55 D72 D83 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cexwps:299999&r= |
| By: | Lin, Zhuoer (Yale University); Ye, Justin (Yale University); Allore, Heather (Yale University); Gill, Thomas M. (Yale University); Chen, Xi (Yale University) |
| Abstract: | Given the critical role of neurocognitive development in early life, this study assesses how racial differences in early-life circumstances are collectively and individually associated with racial disparities in late-life cognition. Leveraging uniquely rich information on life history from the U.S. Health and Retirement Study for non-Hispanic White (White) and non-Hispanic Black (Black) Americans 50 years or older, we employ the Blinder-Oaxaca method to decompose racial gaps in cognitive outcomes into early-life educational experiences, cohort, regional, financial, health, trauma, family relationship, demographic and genetic factors. Overall, differences in early-life circumstances are associated with 61.5% and 82.3% of the racial disparities in cognitive score and impairment, respectively. Early-life educational experience is associated with 35.2% of the disparities in cognitive score and 48.6% in cognitive impairment. Notably, school racial segregation (all segregated schooling before college) is associated with 28.8%-39.7% of the racial disparities in cognition. Policies that improve educational equity have the potential to reduce racial disparities in cognition into older ages. Clinicians may leverage early-life circumstances to promote the screening, prevention, and interventions of cognitive impairment more efficiently, thereby promoting health equity. |
| Keywords: | early life circumstances, life course, school segregation, quality of education, racial disparity, cognition |
| JEL: | J15 I14 J13 J14 I20 H75 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17040&r= |
| By: | Katherine Michelmore; Anna Wiersma Strauss; Emily E. Wiemers |
| Abstract: | Families provide substantial care to older adults with functional limitations. Policies that incentivize work have the potential to reduce this valuable care. This study uses the Health and Retirement Study (HRS) and a simulated instrument approach to examine the consequences of increases in the generosity of the Earned Income Tax Credit (EITC), a work-contingent cash benefit, for the care that parents receive from their EITC-eligible daughters. We find that increases in EITC generosity reduce the care that parents receive from their EITC-eligible daughters, especially older parents and those with functional limitations. To assess the full effect of this reduction in caregiving, we examine whether financial transfers increase as a substitute for reduced care, whether other adult children fill the care gap left by EITC-eligible daughters, and whether paid caregiving increases in response to declines in family care. We find no evidence of increased financial transfers and care gaps remain for older parents that are not filled by other children or paid care providers. We conclude that an unintended consequence of the EITC is that the older parents of EITC recipients receive less care from their children overall in response to increased EITC benefit generosity. |
| JEL: | H24 I38 J22 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32583&r= |
| By: | Delgado Chavarría, Manuel; Vila, Juan; Figueroa, Nincen |
| Abstract: | En este documento se examinan el estado actual y los desafíos del sistema de pensiones en la República Dominicana, centrándose en la implementación del régimen subsidiado de pensiones no contributivas. Se analizan los resultados de su puesta en marcha y se exploran escenarios para la ampliación de su cobertura. Se discuten los aspectos institucionales y financieros de esta ampliación, así como su impacto potencial en la reducción de la pobreza y en la autonomía económica de las personas mayores. Se argumenta que el fortalecimiento y la expansión del sistema de pensiones no contributivo en la República Dominicana serían viables en términos de sostenibilidad financiera y contribuirían a la reducción de la pobreza en la vejez en el país. |
| Date: | 2024–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col022:80377&r= |
| By: | Octavio Granado Martínez |
| Abstract: | Los datos utilizados en este trabajo han sido obtenidos de las liquidaciones presupuestarias del sistema de Seguridad Social de 2018 y 2023, del Informe Económico Financiero anejo a los Presupuestos de la Seguridad Social para 2023, de los informes de la Mutua Umivale Activa, y del Informe sobre Incapacidad Temporal por Contingencias Comunes publicado por la Asociación de Mutuas Colaboradoras de la Seguridad Social (AMAT). También hay citas concretas sobre estadísticas de Eurostat y otras fuentes. Como las cifras de AMAT y de la Intervención General de la Seguridad Social no son plenamente coincidentes, en las cifras de ejecución presupuestaria he preferido esta última fuente. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaeee:eee2024-20&r= |
| By: | Clark, Andrew E. (Paris School of Economics); Lepinteur, Anthony (University of Luxembourg) |
| Abstract: | It is well-known that unemployment leaves scars after re-employment, but does this scarring effect persist even after retirement? We analyse European data on retirees from the SHARE panel, and show that the well-being of the retired continues to reflect the unemployment that they experienced over their working life. These scarring effects are somewhat smaller for older retirees, but larger for those who arguably had higher expectations regarding the labour market when they were active. Despite the substantial variation in culture and labour-market institutions over the 29 countries in our sample, there are no significant country differences. This long-run scarring for those who have left the labour market underlines that contemporaneous correlations significantly under-estimate the well-being cost of unemployment. |
| Keywords: | unemployment, retirement, scarring, CASP, SHARE |
| JEL: | J21 J63 I31 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17068&r= |
| By: | Carlos Vidal Meliá; Juan Manuel Pérez-Salamero González; Anne M. Garvey; Anna Castañer Garriga |
| Abstract: | The aim of this paper is to advocate for a shift in the management of pension liabilities within social security schemes. The proposed change is from an 'out of sight, out of mind' approach to a more transparent approach that accurately reflects the net worth of the system, i.e. a 'tell it like it is' approach. This involves disclosing all assets and liabilities of the scheme through the use of an actuarial balance sheet (ABS) and its associated income statement (IS). |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaeee:eee2024-18&r= |
| By: | Kaveh Danesh; Jonathan T. Kolstad; Johannes Spinnewijn; William D. Parker |
| Abstract: | The rich live longer than the poor, but relatively little is known about the evolution of health inequality across the lifecycle. Using rich administrative data from the Netherlands, we develop an index of chronic disease burden based on the projected contribution to old-age mortality. Chronic conditions account for one-third of the mortality gap in old age. Using our index we demonstrate that health inequality arises much earlier in life; by age 35, the bottom half of the income distribution has the same disease burden as those age 50 in the top half. Approximately 60% of the divergence across income groups is due to low-income individuals developing chronic illness at a faster rate, rather than chronically ill individuals sorting into lower-income groups. Using linked health survey data, we then examine the contributions of various mediators to the incidence of chronic diseases over the life cycle. Socioeconomic and geographic factors explain most of the variation, while individual health behaviors play a moderate role. Our findings align with calls to target health policies toward early-life social determinants of health. |
| JEL: | I1 I12 I14 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32577&r= |
| By: | Carrera, Leandro; Angelaki, Marina |
| Abstract: | Latin American countries have been at the forefront of pension privatization and since 2008 they have also pioneered reform reversals. Previous studies have focused on single cases or a small number of them, given that pension reform is a complex phenomenon arising from the combination of different causes. Using fuzzy-set Qualitative Comparative Analysis (fsQCA), the article analyzes a set of 32 pension reform cases in eight countries from the early 1990s until 2021. It finds four different pathways that combine institutional, structural and policy legacy conditions. It demonstrates that fsQCA is a useful tool for broader comparative policy work. |
| Keywords: | pensions; fsQCA; comparative; politics; institutions; Latin America; Taylor & Francis deal |
| JEL: | R14 J01 |
| Date: | 2024–06–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123032&r= |
| By: | Keisuke Kokubun |
| Abstract: | Today, as the aging of the world accelerates, it is an urgent task to clarify factors that prevent ageism. In this study, using hierarchical multiple regression analysis of data from 40, 869 people from 55 countries collected in the World Values Survey Wave 6, we showed that after controlling for demographic factors, stereotypes, a hungry spirit, and male chauvinism are related to ageism, and that altruism, trust within and outside the family, and trust in competition moderate the relationship between the independent and dependent variables. Furthermore, data from Japan, which has the highest aging rate and aging speed in the world, showed that these moderation relationships are moderated. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.06952&r= |
| By: | Francisco Arenal Seco; Jaime Calmarza Lozano; Álvaro Medina Gutierrez |
| Abstract: | Las presiones económicas y presupuestarias derivadas del envejecimiento de la población suponen uno de los mayores retos a los que se enfrentan los países europeos. En efecto, los desequilibrios causados por la inversión de la pirámide poblacional han pasado de ser una amenaza futura a un fenómeno de actualidad que se intensificará a medida que se jubile la generación del baby boom, la esperanza de vida siga aumentando y las tasas de fertilidad permanezcan en mínimos históricos. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaeee:eee2024-19&r= |
| By: | René Böheim; Thomas Horvath; Thomas Leoni; Martin Spielauer |
| Abstract: | We develop a dynamic microsimulation model to project the labor force and economic dependency ratios in the United States from 2022 to 2060, taking population projections and the large inequalities between population groups of different race/ethnicity and gender into account. We contrast policy scenarios and show the potential impact that closing the gaps in education, health, and participation rates between population subgroups can have on increasing the U.S. labor force. Our baseline projections indicate an increase of the labor force of about 27 million people by 2060, which is mainly caused by population growth. The downstream effects of removing disparities in population health and educational attainment on labor force participation can add about 10% (+2.6 million people) to our baseline projections. The potential effects of closing gaps between genders and between minority groups and the non-Hispanic White population, however, are much larger if we assume the equalization of participation rates for individuals with similar characteristics. Closing gender gaps within ethno-racial groups, for instance, can add 9.9 to 14.3 million people to the labor force. Overall, reducing disparities in labor force participation rates has the potential to more than compensate the effects of demographic aging on the economic dependency ratio. |
| JEL: | C5 J11 J21 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32590&r= |
| By: | Sarah Holmes Berk; James J. Choi; Jay Garg; John Beshears; David Laibson |
| Abstract: | Automatic enrollment is often used to increase retirement savings. What are the effects of using it (or, alternatively, requiring an active enrollment choice) to increase short-term savings? We evaluate two experiments in the U.K. at employers that enable workers to set up payroll contributions to fund short-term savings accounts. In the first experiment (N = 7, 404), employees at two firms were randomly assigned opt-in, opt-out, or active choice enrollment into the short-term savings program. Nine months later, participation was 48 percentage points higher under automatic enrollment than opt-in enrollment, and average balances were £114 higher. In the second experiment (N = 3, 605), after years of offering opt-in payroll contributions to fund a short-term savings account, the employer changed to opt-out enrollment for new hires only. In tenure month 18, participation in the short-term savings program was 48 percentage points higher under automatic enrollment, and average balances were £193 higher. |
| JEL: | D14 G51 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32581&r= |
| By: | Géraldine DUTHÉ; Valérie GOLAZ; Jasmine L. KAHOU NZOUYEM; Cécile LEFEVRE |
| Abstract: | L’Afrique reste un continent jeune. Cependant les transitions démographiques engagées vont de pair avec un vieillissement annoncé voire, dans certains pays, déjà amorcé : l’augmentation en nombre, mais aussi bientôt en proportion, de la population âgée nécessite un ajustement considérable des politiques publiques. Sur le continent, une grande variété de situations coexiste. L'objectif de cette étude est de mettre en regard le développement actuel des systèmes de protection sociale et les dynamiques démographiques au sein des pays. La revue des sources académiques et institutionnelles, nationales et internationales relatives aux systèmes de retraite permet de montrer que l’Afrique affiche de très faibles taux de couverture sociale malgré les efforts déployés par les États. De plus, la quasi-totalité des régimes de protection sociale obligatoires existants sont contributifs dans un environnement où, selon l’Organisation internationale du travail (OIT, 2022b), près de 9 emplois sur 10 relèveraient du secteur informel. Ainsi, seulement 10% de la population d’âge actif soit 6% en Afrique subsaharienne et 20% en Afrique du Nord cotisent à un système contributif d’assurance vieillesse. Les prestations de pensions de vieillesse sont présentes dans tous les régimes existants, mais à ce jour seulement, et toujours selon l’OIT, un tiers de la population des personnes âgées est couverte (par un système contributif ou non).Les différences entre hommes et femmes et entre urbains et ruraux restent importantes.Si les femmes ont une espérance de vie plus grande, elles finissent le plus souvent leur vie dans des conditions de précarité et de vulnérabilité accrues. Seuls 25% ont des droits effectifs à l’assurance-maladie. Le chemin vers une couverture sociale pour tous et toutes reste long au regard des réalités économiques actuelles. Il s’appuie déjà et devra s’appuyer sur des dispositifs de protection sociale innovants (couplage protection santé et vieillesse, complémentarité entre système contributif et non contributif, utilisation des TIC, prise en compte de l’emploi informel) et plus adaptés aux réalités de chaque pays. |
| Keywords: | Afrique |
| JEL: | Q |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:avg:wpaper:fr16919&r= |