nep-age New Economics Papers
on Economics of Ageing
Issue of 2011‒07‒21
two papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Longevity, Life-cycle Behavior and Pension Reform By Peter Haan; Victoria Prowse
  2. Why Care? Social Norms, Relative Income and the Supply of Unpaid Care By Marina Della Giusta; Nigar Hashimzade; Sarah Jewell

  1. By: Peter Haan; Victoria Prowse
    Abstract: How can public pension systems be reformed to ensure fiscal stability in the face of increasing life expectancy? To address this pressing open question in public finance, we estimate a life-cycle model in which the optimal employment, retirement and consumption decisions of forward-looking individuals depend, inter alia, on life expectancy and the design of the public pension system. We calculate that, in the case of Germany, the fiscal consequences of the 6.4 year increase in age 65 life expectancy anticipated to occur over the 40 years that separate the 1942 and 1982 birth cohorts can be offset by either an increase of 4.43 years in the full pensionable age or a cut of 37.7% in the per-year value of public pension benefits. Of these two distinct policy approaches to coping with the fiscal consequences of improving longevity, increasing the full pensionable age generates the largest responses in labor supply and retirement behavior.
    Keywords: Life expectancy, Public Pension Reform, Retirement, Employment, Life-cycle models, Consumption, Tax and transfer system
    JEL: D91 J11 J22 J26 J64
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:oxf:wpaper:556&r=age
  2. By: Marina Della Giusta (Department of Economics, University of Reading); Nigar Hashimzade (Department of Economics, University of Reading); Sarah Jewell (Department of Economics, University of Reading)
    Abstract: We focus on the role of conformity with social norms and concern with relative income in the decision to supply unpaid care for parents. Individuals have different propensities to be influenced by both relative income and social norms, and face a time constraint on the provision of both paid work (which increases their income) and unpaid care. We estimate our model with a sample drawn from the British Household Panel Survey to assess these effects empirically, estimating both the supply of unpaid care and the effect on utility of different preferences for relative income and unpaid care. We find that providing care decreases individual utility: long care hours are bad for carers (and care recipients). Women feature disproportionately amongst care providers and their motivations for care provision differ to men's, both in respect to the importance attached to relative income and to conformity with social norms. After controlling for other factors, men are more envious than women (attach more weight to relative income) and indi¤erent to social norms in relation to caring, whereas the opposite holds for women, so status races are bad for the supply of care within families and particularly men's supply. This is an issue as caring (in right amounts) can be good for carers too if they agree with caring norms, even when they prefer paid work to caring (as men do). We discuss implications for care provision and working arrangements.
    Keywords: care, unpaid work, social norms, relative income
    JEL: J22 Z13 D01 D13
    Date: 2011–07–05
    URL: http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2011-03&r=age

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