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on Demographic Economics |
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Issue of 2018‒06‒18
five papers chosen by Héctor Pifarré i Arolas Max-Planck-Institut für demografische Forschung |
| By: | Courtney Coile; Kevin S. Milligan; David A. Wise |
| Abstract: | This is the introduction and summary to the eighth phase of an ongoing project on Social Security Programs and Retirement Around the World. This project, which compares the experiences of a dozen developed countries, was launched in the mid 1990s following decades of decline in the labor force participation rate of older men. The first several phases of the project document that social security program provisions can create powerful incentives for retirement that are strongly correlated with the labor force behavior of older workers. Subsequent phases of the project have explored disability program provisions and their effects on retirement as well as potential obstacles to promoting work at older ages, including whether there is a link between older employment and youth unemployment and whether older individuals are healthy enough to work longer. In the two decades since the project began, the dramatic decline in men’s labor force participation has ended and been replaced by sharply rising participation rates. Older women’s participation has been rising as well. In this eighth phase of the project, we explore this phenomenon of working longer. We document trends in participation and employment and also consider factors that may help to explain these changes in behavior. We conclude that social security reforms as well as other factors such as the movement of women into the labor force have likely played an important role. |
| JEL: | J14 J26 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24584&r=dem |
| By: | Lorenti, Angelo; Dudel, Christian; Myrskylä, Mikko |
| Abstract: | Under the pressure of population aging the Italian pension system has undergone reforms to increase labor force participation and retirement age, and, thus, the length of working life. However, how the duration of working life has developed in recent years is not well understood. This paper is the first to analyze trends in working life expectancy in Italy. We use data from a nationally representative longitudinal sample of 880,000 individuals from 2003 to 2013 and estimate working life expectancy by gender, occupational category, and region of residence using a Markov chain approach. We document large and increasing heterogeneity in the length of working life. From 2003–2004 to 2012–2013, working life expectancy for men declined from 35.2 to 27.2 years and for women from 34.7 to 23.7 years, increasing the gender gap to 3.5 years. Both young and old were hit, as roughly half of the decline was attributable to ages below 40, half above 40. Working life expectancy declined for all occupational groups, but those in manual occupations lost most, 8.5 years (men) and 10.5 years (women). The North–South economic gradient widened such that men living in the North were expected to work 8 years longer than women living in the South. The fraction of working life of total life expectancy at age 15 declined to record lows at 40% for men and 34% for women in 2012–2013. Policies aiming at increasing total population working life expectancy need to take into consideration the socio-demographic disparities highlighted by our results. |
| Keywords: | Working life expectancy; Great recession; Italy; Financial crisis; Working life table; Multistate life table |
| JEL: | N0 |
| Date: | 2018–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:88302&r=dem |
| By: | Gary V. Engelhardt; Jonathan Gruber; Anil Kumar |
| Abstract: | Social Security faces a major financing shortfall. One policy option for addressing this shortfall would be to raise the earliest age at which individuals can claim their retirement benefits. A welfare analysis of such a policy change depends critically on how it affects living standards. This paper estimates the impact of the Social Security early entitlement age on later-life elderly living standards by tracing birth cohorts of men who had access to different potential claiming ages. The focus is on the Social Security Amendments of 1961, which introduced age 62 as the early entitlement age (EEA) for retired-worker benefits for men. Based on data from the Social Security Administration and March 1968-2001 Current Population Surveys, reductions in the EEA in the long-run lowered the average claiming age by 1.4 years, which lowered Social Security income for male-headed families in retirement by 1.5% at the mean, 3% at the median, and 4% at the 25th percentile of the Social Security income distribution. The increase in early claiming was associated with a decrease in total income, but only at the bottom of the income distribution. There was a large associated rise in elderly poverty and income inequality; the introduction of early claiming raised the elderly poverty rate by about one percentage point. Finally, for the 1885-1916 cohorts, the implied elasticity of poverty with respect to Social Security income for male-headed families is 1.6−. Overall, we find that the introduction of early claiming was associated with a reduction in income and an increase in the poverty rate in old age for male-headed households. |
| JEL: | H31 J26 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24609&r=dem |
| By: | Cipriani, Giam Pietro (University of Verona); Pascucci, Francesco (University of Verona) |
| Abstract: | We set up an overlapping generations model with endogenous fertility to study pensions policies in an ageing economy. We show that an increasing life expectancy may not be detrimental for the economy or the pension system itself. On the other hand, conventional policy measures, such as increasing the retirement age or changing the social security contribution rate could have undesired general equilibrium effects. In particular, both policies decrease capital per worker and might have negative effects on the fertility rate, thus exacerbating population ageing. |
| Keywords: | overlapping generations, pension policies, endogenous fertility, ageing |
| JEL: | H55 J13 J18 J26 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11511&r=dem |
| By: | Seth Pruitt; Nicholas Turner |
| Abstract: | What is the nature of labor income risk facing households? We answer this question using detailed administrative data on household earnings from the U.S. Internal Revenue Service. By analyzing total household labor earnings as well as each member's earnings, we offer several new findings. One, households face substantially less risk than males in isolation. Second, households face roughly half the countercyclical increase in risk that males face. Third, spousal labor income ameliorates household earnings risk through both extensive and intensive margins. |
| Keywords: | Earnings risk ; Household labor dynamics |
| JEL: | J21 E24 D13 E32 |
| Date: | 2018–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2018-34&r=dem |