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on Economics of Ageing |
| By: | Piera Bello; Vincenzo Galasso; Alessandro Izzo |
| Abstract: | This paper examines how policy uncertainty influences retirement decisions. We develop a simple model in which individuals face a one-time choice between immediate retirement and continued employment until the statutory retirement age. In the absence of policy uncertainty, retirement decisions depend solely on the standard income–leisure trade-off. When future pension reforms are uncertain, however, individuals also take into account the perceived risk of increases in the retirement age or reductions in benefit generosity, and may choose to accept the offer in order to lock in current pension rules. Using administrative data from a large Italian bank that offered a one-time early-retirement scheme in 2017, we find that acceptance rates decline with the expected income loss but rise with the number of years to retirement. These patterns are consistent with workers using early retirement as an insurance against potential policy changes, underscoring the importance of incorporating behavioural responses to policy uncertainty in the design of pension systems. Our findings suggest that individuals with an average annual income of €35, 000 are willing to pay an annual premium of €481 to insure against the probability that the pension system is reformed. |
| Keywords: | retirement, social security, loss aversion, uncertainty, pension reform |
| JEL: | D91 H55 J14 J26 J38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12488 |
| By: | Duk Gyoo Kim; In Do Hwang |
| Abstract: | Population aging and the sustainability of retirement financing are critical challenges facing many developed economies. In South Korea, elderly poverty remains a critical issue, despite widespread homeownership among older adults. Although the home pension program allows retirees to unlock housing wealth, uptake remains below 2% as of 2024. Using a large-scale survey of adults aged 55–79, we conduct an information provision experiment to assess how policy reforms and belief corrections affect demand. We find that enrollment intention rises by 6 percentage points when monthly pension payments are adjusted with house price changes, and by 5 percentage points when bequest conditions are made more flexible. Notably, merely informing that the fixed monthly payments—often perceived as disadvantageous during housing price increases—do not result in a loss when house prices rise because the amount bequeathed to their children increases accordingly, led to a 7%p increase in enrollment intention. Our results suggest that addressing informational barriers may be as effective as structural reforms in increasing program uptake. |
| Keywords: | home pension, reverse mortgage, survey experiment |
| JEL: | D14 C93 H55 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12477 |
| By: | Fan, Simon (Lingnan University); Pang, Yu (Macau University of Science and Technology); Pestieau, Pierre (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | Global trends in delayed childbearing and population aging have intertwined parenting and eldercare, necessitating concurrent attention to young children and elderly parents. This paper develops an overlapping-generations model where young adults, exhibiting two-sided altruism, educate their children to promote human capital accumulation and provide caregiving for their aging parents. Education can be attained through financial investments and the implementation of harsh discipline, which demands minimal parental resources but can strain parent-child relations. Eldercare is labor intensive, with its quality decreasing with the frequency of childhood discipline. Our positive analysis suggests that extended longevity may reduce the prevalence of harsh parenting, and enhanced altruism towards the elderly benefits them but can have adverse effects on private savings and children’s human capital. We then examine the steady-state first-best solution and the second-best public policies. When intergenerational altruism is limited, we advocate for the idea of taxing labor and subsidizing education from a novel perspective of adjusting parenting styles and promoting eldercare. |
| Keywords: | Parenting style ; Human capital ; Longevity ; Long-term care |
| JEL: | I21 J13 J24 |
| Date: | 2024–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2024029 |
| By: | Hannah Landel; David A. Love; Paul A. Smith |
| Abstract: | We create an annualized measure of comprehensive household wealth using the 1998–2022 waves of the Health and Retirement Study and examine heterogeneity in retirement resources across households, cohorts, and time. We augment traditional net worth with the actuarial present values of expected future payment streams from labor-market earnings, Social Security, defined-benefit pensions, annuities, life insurance, and government transfers. We then calculate an annualized measure of that lump sum by converting it into an actuarially fair joint life annuity that we call annualized comprehensive wealth (ACW). We find that the median ACW increases throughout retirement, indicating that the median household is spending down its total resources more slowly than its joint life expectancy is shortening. In addition, we document considerable heterogeneity in the levels and trajectories of ACW across cohorts, education groups, and race. Notably, we find that the pattern of rising ACW is largely driven by college-educated and white households. Other groups show relatively flat or declining trajectories of ACW after retirement. We further explore the heterogeneity of ACW with the help of recentered influence function regressions. We show that inequality in ACW is associated with higher household-specific rates of return, higher education, and greater concentrations of single-headed and Black and Hispanic households. |
| Keywords: | Distribution (economics); Wealth; Pensions; Social security; Retirement |
| JEL: | D14 D91 I24 J11 J14 J15 J26 |
| Date: | 2026–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:102440 |
| By: | German Nova Orozco; Duy-Minh Dang; Peter A. Forsyth |
| Abstract: | Money-back guarantees (MBGs) are features of pooled retirement income products that address bequest concerns by ensuring the initial premium is returned through lifetime payments or, upon early death, as a death benefit to the estate. This paper studies optimal retirement decumulation in an individual tontine account with an MBG overlay under international diversification and systematic longevity risk. The retiree chooses withdrawals and asset allocation dynamically to trade off expected total withdrawals (EW) against the Conditional Value-at-Risk (CVaR) of terminal wealth, subject to realistic investment constraints. The optimization is solved under a plan-to-live convention, while stochastic mortality affects outcomes through its impact on mortality credits at the pool level. We develop a neural-network based computational approach for the resulting high-dimensional, constrained control problem. The MBG is priced ex post under the induced EW--CVaR optimal policy via a simulation-based actuarial rule that combines expected guarantee costs with a prudential tail buffer. Using long-horizon historical return data expressed in real domestic-currency terms, we find that international diversification and longevity pooling jointly deliver the largest improvements in the EW--CVaR trade-off, while stochastic mortality shifts the frontier modestly in the expected direction. The optimal controls use foreign equity primarily as a state-dependent catch-up instrument, and implied MBG loads are driven mainly by tail outcomes (and the chosen prudential buffer) rather than by mean payouts. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.16212 |
| By: | Lassila, Jukka; Valkonen, Tarmo; Kauppi, Eija |
| Abstract: | Abstract This study evaluates the reforms proposed by the Ministry of Social Affairs and Health for the earnings-related pension system in the 2025 legislative proposal. The proposed reform would allow private-sector pension institutions to take on greater investment risk. According to Etla’s assessment, the investment reform would increase expected returns and strengthen public finances, as intended. The proposal also includes increased prefunding of old-age pensions, which is justified from an intergenerational perspective. The proposed index limiter, however, is problematic: while it would remove incentives to retire early when real wages decline, it would simultaneously and permanently reduce the purchasing power of pensions across age cohorts in an arbitrary manner, regardless of whether such cuts are warranted. Overall, the legislative proposal leaves open what would occur if investment returns fall short of expectations or, conversely, exceed projections over an extended period. Adoption of the proposal would imply that further reforms are likely and that labour market organizations would retain control over this central component of social security and over Finland’s largest—and, following the reform, likely expanding—concentration of assets. |
| Keywords: | Earnings-related pension system, Pension reform, Investment activity, Numerical overlapping-generations model |
| JEL: | H55 G23 D91 |
| Date: | 2026–02–18 |
| URL: | https://d.repec.org/n?u=RePEc:rif:report:173 |
| By: | Oscar Galvez-Soriano; Raymundo Ramirez Peralta |
| Abstract: | This paper examines the effects of the 2019 universalization of Mexico's Social Pension Program (PAM), one of the country's most expansive and politically salient social programs. The reform simultaneously increased the cash transfer and extended eligibility to all individuals aged 65 and over, regardless of income or contributory pension status. Using nationally representative data from the ENIGH and a triple-differences (DDD) identification strategy, we estimate the causal effect of the universalization on poverty and labor market outcomes. Our empirical approach exploits variation across time (pre- and post-reform), age (eligible vs. ineligible), and pension scheme status (non-contributory vs. contributory), allowing us to separate the effects of expanded eligibility from those of increased benefit levels. We find strong increases in take-up rates and no significant change in overall poverty rates, suggesting that many new beneficiaries were not economically vulnerable. However, we document a surprising increase in extreme poverty, concentrated among low-income elderly who responded to the reform by exiting the labor force. This reduction in labor supply, driven by a significant drop in employment among individuals in the bottom income quartile, suggests that the pension acted as a substitute for labor income rather than a supplement. Taken together, the results highlight the trade-offs inherent in universal pension programs: while broader access reduces administrative exclusion, extending transfers to economically secure individuals may dilute redistributive impacts and generate behavioral responses that offset potential welfare gains. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.14774 |
| By: | Ho, Christine; McGarry, Kathleen |
| Abstract: | Adult children, especially sons, are often considered a linchpin of support to older parents in many patriarchal societies. We develop a model of transfers from adult children to older parents as existing in separate spheres depending on the child’s gender and type of transfer. Using data from the China Health and Retirement Longitudinal Study, we find strong evidence of such differentiation. Coresidential support comes almost exclusively from sons as do large transfers, while daughters are more likely to make smaller transfers. Interestingly, crowding-out of financial transfers by siblings occurs primarily within gender: sons give less when they have more brothers but not when they have more sisters, and daughters give less when they have more sisters but not when they have more brothers. This pattern is present for both in-kind and cash transfers, suggesting that support from adult children may not be substitutable between genders, even for relatively fungible currencies. |
| Keywords: | gendered public goods; old age support; separate spheres; son preference; AAM requested |
| JEL: | D13 J13 J14 J16 |
| Date: | 2025–02–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127537 |
| By: | Arpad Abraham; Pavel Brendler; Eva Carceles-Poveda |
| Abstract: | We study whether redesigning the social security and income tax-transfer systems can deliver significant welfare gains. Our rich quantitative model features both realistic inequality over the lifecycle and the key channels through which redistributive policies can distort aggregate allocations. We find that there are two distinct ways to achieve significant welfare gains. The first prioritizes reducing distortions through a regressive pension system, resulting in higher inequality. The second reduces inequality through progressive pensions, complemented with a less progressive tax system to mitigate the rise in distortions. In both reform types, pension progressivity emerges as a powerful instrument to either manage distortions or redistribute income within generations. Since redistributive instruments turn out to be highly distortionary in our benchmark economy, the policy reducing distortions turns out to be optimal under utilitarian social welfare. |
| Date: | 2026–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/820 |
| By: | Ho, Christine; Kim, Dahye; Ray, Rohan; Teerawichitchainan, Bussarawan |
| Abstract: | Health and well-being in mature adulthood are important concerns given the prevalence of individuals aging without children. We exploit two new instruments for childlessness—infertility and the number of childless siblings—and condition our analyses on a rich set of covariates including childhood health and financial status, to investigate the causal relationship between childlessness and health in middle age and older adulthood. Using a nationwide dataset of 1500 Singaporeans aged 50 and above, we show that OLS underestimates the negative effects of childlessness on health. We find that childlessness leads to higher likelihood of poorer self-reported health and mental distress. The results are robust to a battery of sensitivity analyses, including bounding the effects by relaxing the exclusion restrictions. |
| Keywords: | health and well-being; childlessness; instrumental variable; bounds; aging |
| JEL: | I10 I31 J13 J14 |
| Date: | 2026–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137147 |
| By: | Julia Peter; Jana Schuetz |
| Abstract: | Financial literacy is an important prerequisite for making informed financial decisions, but it remains low, especially among women and older people. Internalized stereotypes can undermine confidence and subsequently affect behavior in financial matters, leading to suboptimal decisions. This paper investigates how stereotype salience affects confidence in financial literacy. In an information provision experiment, we inform respondents about age or gender differences in numeracy to examine the impact on financial literacy, confidence, hypothetical investment and saving decisions, and demand for information and education. We find that being informed about age differences has no significant effect. In contrast, being informed about gender differences increases the confidence of male respondents through a stereotype boost, while leaving female respondents largely unaffected. |
| Keywords: | survey experiment, numeracy, gender stereotypes, age stereotypes |
| JEL: | C90 D91 G53 I24 J16 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12384 |
| By: | Devolder, Pierre (Université catholique de Louvain, LIDAM/ISBA, Belgium); Hartmann, Kevin (KULeuven) |
| Abstract: | Cet article examine l’impact de la réforme belge des pensions du 30 mars 2018 sur l’équité intergénérationnelle entre les fonctionnaires et les agents contractuels des administrations locales. Conçue pour corriger des déséquilibres historiques, la réforme introduit un système de pension mixte et un deuxième pilier pour les contractuels. Nous avons analysé ces évolutions à travers des simulations, en modélisant et comparant les taux de remplacement et les niveaux de pension pour différents profils, tout en mettant en lumière l’impact des nominations et des affiliations tardives. Les résultats révèlent que, si certaines inégalités entre statuts ont été réduites par la réforme, de nouvelles disparités intergénérationnelles ont émergé. Les générations intermédiaires, en particulier les agents affiliés tardivement au deuxième pilier, affichent des taux de remplacement inférieurs, comparés aussi bien aux fonctionnaires disposant d’une pension complète qu’aux jeunes contractuels, qui bénéficient davantage du système grâce à un horizon temporel plus favorable. Ces résultats soulignent les difficultés d’un modèle de capitalisation dans un contexte de transition rapide. Pour favoriser une transition plus équitable et assurer une meilleure viabilité du système, l’article évoque des ajustements dynamiques des contributions ainsi que des mécanismes de compensation ciblés pour les agents les plus impactés. Il évalue également l’effet de certains projets de réforme envisagés pour la pension statutaire qui rendront les enjeux d’équité d’autant plus prégnants. |
| Date: | 2025–02–05 |
| URL: | https://d.repec.org/n?u=RePEc:aiz:louvad:2025001 |
| By: | Alireza Ghahtarani; Ahmed Saif; Alireza Ghasemi |
| Abstract: | Asset Liability Management (ALM) represents a fundamental challenge for financial institutions, particularly pension funds, which must navigate the tension between generating competitive investment returns and ensuring the solvency of long-term obligations. To address the limitations of traditional frameworks under uncertainty, this paper implements Distributionally Robust Optimization (DRO), an emergent paradigm that accounts for a broad spectrum of potential probability distributions. We propose and evaluate three distinct DRO formulations: mixture ambiguity sets with discrete scenarios, box ambiguity sets of discrete distribution functions, and Wasserstein metric ambiguity sets. Utilizing empirical data from the Canada Pension Plan (CPP), we conduct a comparative analysis of these models against traditional stochastic programming approaches. Our results demonstrate that DRO formulations, specifically those utilizing Wasserstein and box ambiguity sets, consistently outperform both mixture-based DRO and stochastic programming in terms of funding ratios and overall fund returns. These findings suggest that incorporating distributional robustness significantly enhances the resilience and performance of pension fund management strategies. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.08228 |
| By: | Goshi Aoki |
| Abstract: | Japan's population is shrinking, the share of working-age people is falling, and the number of elderly is growing fast. These trends squeeze public finances from both sides--fewer people paying taxes and more people drawing on pensions and healthcare. Policy discussions often focus on one fix at a time, such as raising taxes, reforming pensions, or boosting productivity. However, these levers interact with each other through feedback loops and time delays that are not yet well understood. This study builds and calibrates an integrated system dynamics model that connects demographics, labor supply, economic output, and public finance to explore two questions: (RQ1) What feedback structure links demographic change to fiscal outcomes, and how do different policy levers work through that structure? (RQ2) Which combinations of policies can stabilize key fiscal indicators within a meaningful timeframe? The model, grounded in official statistics, tracks historical trends reasonably well. Policy experiments show that productivity improvements and controlling per-person costs offer the most effective near-term relief, because they act quickly through revenue and spending channels. In contrast, raising fertility actually worsens the fiscal picture in the medium term, since it takes decades for newborns to grow up and join the workforce. A combined scenario pairing moderate productivity gains with moderate cost control nearly eliminates the deficit by 2050. These findings underscore the importance of timing when evaluating demographic policy. Stabilizing finances within a practical timeframe requires levers that improve the budget directly, rather than those that work through slow demographic channels. The model serves as a transparent testing ground for designing time-aware fiscal policy packages in aging, high-debt economies. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.10130 |
| By: | Susann Rohwedder; Michael D. Hurd; Axel H. Börsch-Supan |
| Abstract: | It is widely believed that procrastination contributes to under-saving. Using household survey data from the United States and Singapore, we find little evidence to support this view. In both countries, indicators of procrastination have only weak, if any, explanatory power for saving regret. About half of respondents aged 60–74 expressed regret about not having saved more, but this sentiment was primarily associated with exposure to economic shocks rather than procrastination. A larger share of U.S. respondents reported saving regret, reflecting their greater exposure to adverse shocks. In contrast, Singapore’s system of mandatory saving for retirement, housing, and health expenses appears to mitigate the long-term financial impact of such shocks. However, with little opportunity for risk pooling, Singapore households still remain vulnerable to shocks. These findings highlight the importance of institutional design in risk protection over the lifecycle. |
| JEL: | D15 J14 J18 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34835 |
| By: | Luis E. Arango; Luz A. Flórez; Carlos E. Posada |
| Abstract: | This study analyzes the short‑ and long‑run determinants of household consumption in Colombia using monthly data from April 2003 to June 2022. We estimate Nonlinear Autoregressive Distributed Lag (NARDL) models to examine asymmetric long‑run responses of consumption to positive and negative changes in current income and interest rates. Consumption is measured using the retail trade index excluding motor vehicles and fuels. We find a cointegrating relationship linking consumption with current income (proxied by the Economic Situation Indicator, ESI), remittances, consumer credit, and the real interest rate on consumer credit. In the short run, consumer confidence and the age composition of the population also play a significant role in shaping consumption dynamics. The estimates reveal pronounced long‑run asymmetries: income increases are associated with a long‑run propensity to consume that is approximately 25 percent larger than that implied by income declines, while interest‑rate reductions elicit long‑run responses nearly 188 percent larger in absolute value than rate increases. These patterns are consistent with liquidity constraints, with the income‑driven asymmetry delivering a superior fit—by standard model‑comparison criteria—relative to the interest‑rate asymmetry. The negative association between population aging and consumption is difficult to reconcile with a benchmark life‑cycle model in the presence of capital‑market frictions. It also underscores the need to anticipate headwinds to aggregate demand as population aging proceeds. *****RESUMEN: Este articulo analiza los determinantes de corto y largo plazo del consumo de los hogares en Colombia utilizando datos mensuales de abril de 2003 a junio de 2022. Estimamos modelos de rezagos distribuidos autorregresivos no lineales (NARDL) para examinar las respuestas asimétricas de largo plazo del consumo ante cambios positivos y negativos en el ingreso corriente y en la tasa de interés. El consumo se mide mediante el índice de comercio al por menor que excluye vehículos automotores y combustibles. Encontramos una relación de cointegración que vincula el consumo con el ingreso corriente (aproximado por el Indicador de Situación Económica, ESI), las remesas, el crédito de consumo y la tasa de interés del crédito de consumo. En el corto plazo, la confianza del consumidor y la composición etaria de la población también desempeñan un papel significativo en la dinámica del consumo. Las estimaciones revelan asimetrías pronunciadas de largo plazo: los incrementos del ingreso generan propensiones a consumir en el largo plazo aproximadamente 25 por ciento mayores que las asociadas a caídas del ingreso, mientras que las reducciones de la tasa de interés inducen respuestas de largo plazo casi 188 por ciento mayores (en magnitud) que los aumentos de la tasa. Estos patrones son coherentes con la presencia de restricciones de liquidez; además, la asimetría impulsada por el ingreso corriente presenta un ajuste superior —según criterios estándar de comparación de modelos— frente a la asimetría asociada a la tasa de interés. La asociación negativa entre envejecimiento de la población y consumo es difícil de conciliar con un modelo de ciclo de vida de referencia dadas las fricciones en el mercado de crédito. Asimismo, subraya la necesidad de anticipar presiones a la baja sobre la demanda agregada a medida que avanza el envejecimiento poblacional. |
| Keywords: | Household consumption, nonlinearities, liquidity constraints, precautionary savings, remittances, aging population, Consumo de los hogares, no linealidades, restricciones de liquidez, ahorro precautelativo, remesas, envejecimiento de la población. |
| JEL: | E21 E27 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:bdr:borrec:1346 |
| By: | Florian Bonnet (INED - Institut national d'études démographiques); Ina Alliger (BIB - Federal Institute for Population Research); Carlo Giovanni Camarda (INED - Institut national d'études démographiques); Sebastian Klüsener (BIB - Federal Institute for Population Research, Universität zu Köln = University of Cologne, VDU - Vytautas Magnus University - Vytauto Didziojo Universitetas); France Meslé (INED - Institut national d'études démographiques); Michael Mühlichen (BIB - Federal Institute for Population Research); Josselin Thuilliez (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Pavel Grigoriev (BIB - Federal Institute for Population Research) |
| Abstract: | Decelerating gains in life expectancy ( e 0 ) in high-income countries have raised concerns about the future of human longevity. To enhance our understanding of these developments, we examine subnational ( N = 450) mortality trends in Western Europe in the period 1992-2019. Between 1992 and 2005, gains in life expectancy were both substantial and widespread. Laggard regions experienced the fastest improvements, yielding rapid regional convergence. Between 2005 and 2019, however, gains in these regions decelerated, while remaining remarkably stable in vanguard regions, suggesting that it remains possible to continue extending longevity. The observed slowing of e 0 gains is strongly associated with mortality at ages 55-74, which increased in this period across large areas of Western Europe, particularly in Germany and France. In this work, we show that monitoring mortality trends at a fine geographical level is crucial for revealing both the potential for, and challenges to, sustainable progress in human longevity. |
| Keywords: | Europe, human geography, mortality changes, life span, life expectancy |
| Date: | 2026–01–24 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05481231 |
| By: | Claude Diebolt (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Date: | 2025–10–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05511263 |