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on Economics of Ageing |
| By: | Mauro Mastrogiacomo; Rob Alessie |
| Abstract: | <p>We use a confirmatory factor analysis to study the relation between the importance of a broad spectrum of saving motives, such as saving for retirement, and saving behavior. </p><p>Survey data show that many respondents save for retirement in unconventional retirement accounts, such as<br />investments in real estate. We show that finding the retirement motive important does not directly translate in additional retirement savings. We show that the annuity stream generated by conventional and unconventional accounts from age 65 onwards is small and that most savings are residual and are not being put aside for a specific motive. Also self-employed retirement savings are low, even though this group has generally no occupational pension.</p> |
| JEL: | D12 D91 E21 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:200&r=age |
| By: | Fabrizio Botti; Marcella Corsi; Carlo D'Ippoliti |
| Abstract: | Active ageing strategies have so far strongly focussed on increasing senior workers employment rates through pension reforms to develop incentives to retire later on the one hand, and labour market policies on the other hand. Most measures are based on the dominant male trajectory of work and retirement and they are not explicitly gender mainstreamed. By contrast, a gender approach would prove fundamental to the labour market inclusion of elderly people, because in old age women suffer from the accumulated impact of the barriers to employment they encountered during their lifetime (e.g. repeated career breaks, part-time work, low pay and gender pay gap). Moreover, it appears that some pension reforms, by mandating a higher postponement of retirement and by establishing tighter links between formal employment and pension benefits may negatively affect the already high risk of poverty for elderly women. Active ageing strategies have so far strongly focussed on increasing senior workers employment rates through pension reforms to develop incentives to retire later on the one hand, and labour market policies on the other hand. Most measures are based on the dominant male trajectory of work and retirement and they are not explicitly gender mainstreamed. By contrast, a gender approach would prove fundamental to the labour market inclusion of elderly people, because in old age women suffer from the accumulated impact of the barriers to employment they encountered during their lifetime (e.g. repeated career breaks, part-time work, low pay and gender pay gap). Moreover, it appears that some pension reforms, by mandating a higher postponement of retirement and by establishing tighter links between formal employment and pension benefits may negatively affect the already high risk of poverty for elderly women. |
| Keywords: | Gender differences; Ageing; Pensions; Active labour market policies; Age management |
| JEL: | J14 J16 J71 |
| Date: | 2011–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:2013/106179&r=age |
| By: | Galasso, Vincenzo; Profeta, Paola |
| Abstract: | We study how the prevailing internal organization of the family affected the initial design of pension systems. Our theoretical framework predicts that, in society with weak family ties, pensions systems were introduced to act as a safety net, while in societies with strong ties they replicate the tight link between generations by providing generous benefits. Using a historical classification of family ties, we show that in societies dominated by (weak ties) absolute nuclear families (e.g. Anglo-Saxon countries), safety net pension systems emerged; and vice versa in societies dominated by strong families. These results are robust to controlling for alternative legal, religious, and political explanations. Evidence on individual data confirm these findings: US citizens whose ancestors came from countries featuring strong ties (communitarian or egalitarian nuclear) families prefer to rely on the government as a provider of old age security through generous retirement benefits. |
| Keywords: | culture; family ties; pension design |
| JEL: | H10 H55 N30 Z10 Z13 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8723&r=age |
| By: | Carlo Mazzaferro; Marcello Morciano |
| Abstract: | Reforms to the Italian social security system, carried out from 1992 onwards, will dramatically change its structure in the long run. So far, empirical research has devoted more attention to their macroeconomic and financial effects while relatively less attention has been paid to analysing their redistributional implications. We present this line of research using CAPP_DYN, a population-based dynamic microsimulation model. The model stochastically simulates the socio-demographic and economic evolution of a representative sample of the Italian population over the period 2010-2050. The initial sample is subjected to a large number of demographic and economic events such as partnership formation/dissolution, birth, education, work, retirement, health and disability and death. While acknowledging the rather complex phasing in of the Notional Defined Contribution system, introduced into the Italian social security system from 1995, a set of indexes (net present value ratio, Gini index, replacement ratios etc.) is used to evaluate the distributional properties of the reformed pension system in each of the simulated years as well as in a life-time/cohort perspective. Two main critical distributional aspects will emerge. Firstly the model predicts an increase in the old-age pensions dispersion in the transitional phase (2015 – 2030) due to the coexistence of different pension regimes and rules in calculating pensions. Moreover, a problem of adequacy in the public pension system from 2035 emerges as the NDC system will be almost completely phased in. |
| JEL: | H20 H30 H55 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:itt:wpaper:wp2011-11&r=age |
| By: | ICHIMURA Hidehiko; SHIMIZUTANI Satoshi |
| Abstract: | While the average retirement age is higher in Japan, the retirement process has not been in-depth explored from multiple factors including economic, health and family statuses. We examine the transition of work status and working hours for Japanese males and females using JSTAR (Japanese Study on Aging and Retirement) in 2007 and 2009. We provide some empirical patterns of retirement. First, those who are aged 60 or over and retired stay retired two years later, either male or female, while some portion of those who are aged in 50s come back to work. Second, the probability to retire in 2009 for those who were not retired in 2007 ranges 20-30%. Higher index workers in their 60s are less likely to retire but quickly retire if working hours are reduced. Third, higher index workers seem to keep working at the current working hours than lower index counterparts. |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11080&r=age |
| By: | Natalie Jackson (University of Waikato) |
| Abstract: | This paper outlines the key demographic forces shaping New Zealand’s future. It ranges broadly across birth rates, life expectancy and migration to show how this converging demography will result in a regionally-disparate future. It identifies a migration-driven bite in New Zealand’s age structure across the young adult ages that is pronounced in non-urban areas, and argues that while rural regions have long lost young adults and sun-belt regions gained older, what differs is that this phenomenon is now occurring alongside population ageing, rendering such age structures no longer conducive to growth. The converging trends will not only make responding to baby boomer retirement more difficult but will increase competition for workers and push up labour and consumption costs. With the exception of larger urban areas and some retirement zones, it shows that sub national growth in much of New Zealand has already ended and that this scenario will continue to unfold until zero growth or population decline embraces all but the major urban areas. This is despite a national growth rate which is currently near equal the annual global growth rate. The paper posits that it is time to re-evaluate the question ‘when does population growth ‘end’?’ |
| Keywords: | population growth; population ageing; sub-national area |
| JEL: | J11 R23 |
| Date: | 2011–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:wai:nidaea:wp-1&r=age |
| By: | Carolina Fugazza (Università di Torino and CeRP-Collegio Carlo Alberto) |
| Abstract: | In this paper we evaluate the expected evolution of the Trattamento di ?ne rapporto over the Italian employees?working life careers. We use adiminstrative (INPS) data to disentangle the amount that is expected to be accumulated until retirement, the amount expected not to accrue because of discountinuos working careers and/or paid as an anticipated withdrawal. This is relevant in the light of the recent pension system reforms that encourage the diversion of the TFR to pension funds. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:crp:wpaper:125&r=age |
| By: | Dirk Broeders; An Chen; David Rijsbergen |
| Abstract: | In this paper we derive an analytic valuation formula for a generalized form of liabilities in hybrid pension plans taking account of both equity and interest rate risk. Comparative statistics are carried out to show the relevance of some key parameters in defining the hybrid pension plans, particularly the indicator of hybridity and the equity allocation in the pension fund’s investment policy. We find that both the level of hybridity and the equity allocation of the pension fund impact the value of hybrid plan liabilities. This should affect the negotiation between employers and employees on total labor compensation. |
| Keywords: | Market consistent valuation; overlapping generations; forward risk adjusted measure; Vasicek |
| JEL: | G12 G13 G23 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:326&r=age |
| By: | Hasan U. Altiok (Eastern Mediterranean University, North Cyprus); Glenn P. Jenkins (Eastern Mediterranean University, North Cyprus and Queen's University, Canada) |
| Abstract: | This paper estimates the fiscal burden of the Pay-As-You-Go (PAYGO) civil service pension systems that were closed in 2008 to new members in North Cyprus. At that time, a new pension system was introduced for the newly hired government employees and new private sector workers. Estimates are made of the difference between the present values of future contributions and the pension benefits. This approach measures the government’s net liabilities related to the accruals of the pension rights received by the individuals covered through these plans for the period from 2009 to the death of the last member in the system. The estimated unfunded cost of these civil service pension plans is 7.3 billion euros or 276% of GDP. This amount of implicit debt is significantly higher than 5.8 billion euros that has been estimated as the amount of cash compensation for land and property that would need to be paid in order to reach an agreement for a solution to the Cyprus conflict. |
| Keywords: | civil service pensions, pension liabilities, implicit pension debt, pension indexing, North Cyprus |
| JEL: | H55 H68 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1284&r=age |
| By: | José Antonio Haro Peralta (Universidad de Salamanca y CSIC) |
| Abstract: | A comparative analysis of the Demographic Transition in China, Japan and South Korea is offered, aimed at identifying the peculiarities and common denominators of this proc-ess in these countries. The context within which these countries have developed the Demographic Transition has conditioned the pace and speed of the process. The causes and consequences of the recent decline in fertility rates to extremely low levels in these countries are also explored. These demographic changes have induced social and economic transformations, which are examined, and the extent to which these countries can be considered characteristic of the Second Demographic Transition is discussed as well. Finally, the impact of the demographic dividend on the recent economic growth of these countries is also analyzed, and the possible consequences of demographic aging for their future are explored. |
| Keywords: | Demographic Transition, Mortality, Fertility, Demographic Dividend, Aging |
| JEL: | J11 J13 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:1110&r=age |
| By: | Jere R. Behrman (University of Pennsylvania); Maria Cecilia Calderon (Population Council); Olivia S. Mitchell (Wharton School, University of Pennsylvania); Javiera Vasquez (Universidad de Chile); David Bravo (Universidad de Chile) |
| Abstract: | Chile’s innovative privatized pension system has been lauded as possible model for Social Security system overhauls in other countries, yet it has also been critiqued for not including a strong safety net for the uncovered sector. In response, the Bachelet government in 2008 implemented reforms to rectify this shortcoming. Here we offer the first systematic effort to directly evaluate the reform’s impacts, focusing on the new Basic Solidarity Pension for poor households with at least one person age 65+. Using the Social Protection Survey, we show that targeted poor households received about 2.4 percent more household annual income, with little evidence of crowding-out of private transfers. We also suggest that recipient household welfare probably increased due to slightly higher expenditures on basic consumption including healthcare, more leisure hours, and improved self-reported health. While measured short-run effects are small, follow-ups will be essential to gauge longer-run outcomes. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp245&r=age |
| By: | Zuzana Smidova |
| Abstract: | The Czech fiscal position is generally sound and policy making is prudent. However, the fiscal framework was not strong enough to contain spending in the upturn and it would benefit from independent budget oversight. An anchor for the fiscal policy would be helpful, in the form of an explicit debt target coupled with corresponding spending ceilings and deficit targets. The ongoing fiscal consolidation, spending pressures and an already relatively high average tax burden necessitate public sector efficiency improvements. There is scope for improvement in the management of government spending, mainly by enhancing transparency, introducing performance-oriented budget indicators at both central and local levels, improving the management of state-owned enterprises and developing the procurement practices of the public sector. Legislated increases in the retirement age will improve pension system sustainability. A new defined contribution tier is being introduced which should help to diversify future retirement income. At the same time, there is uncertainty about the number of participants who will decide to divert their contribution to the new tier and hence about the implications for revenues in the existing defined benefit pension tier. Also, attention should be taken regarding administrative costs of the new tier, since these can have a significant impact on future replacement rates and therefore public support for it. With more emphasis on private savings, the financial literacy of the population also needs to be stepped up. In healthcare the authorities plan to continue improving the multi-insurer model through incremental reforms such as limiting pharmaceutical costs and improving provider-payment system. The potential for efficiency improvement in healthcare network planning and better care management should be explored, while ensuring that insurers and health providers are given the correct incentives. This working paper relates to the 2011 Economic Survey of the Czech Republic, www.oecd.org/eco/surveys/czech.<P>Efficience des dépenses publiques en République tchèque : cadre de politique budgétaire et principales zones de dépenses dans le domaine des retraites et des soins de santé<BR>La situation des finances publiques tchèques est globalement saine et la politique budgétaire est prudente. Cependant, le cadre budgétaire n'a pas permis de contenir les dépenses durant la phase ascendante du cycle et il pourrait être renforcé par une meilleure application des plafonds de dépenses à moyen terme et par la mise en place d'un mécanisme indépendant de supervision des finances publiques. La politique budgétaire gagnerait à avoir un point d'ancrage sous la forme d'un objectif d'endettement explicite assorti des objectifs de déficit et plafonds de dépenses correspondants. L'effort d'assainissement budgétaire en cours, la pression des dépenses et une charge fiscale moyenne déjà relativement lourde sont autant de facteurs qui nécessitent une amélioration de l'efficience du secteur public. Il est possible d'améliorer la gestion des dépenses publiques, principalement en favorisant une plus grande transparence, en adoptant des indicateurs budgétaires axés sur les résultats au niveau central et au niveau local, en renforçant la gouvernance des entreprises publiques et en perfectionnant les procédures de passation des marchés publics. Le relèvement programmé de l'âge de la retraite améliorera la viabilité du système de retraite. Le nouveau régime à cotisations définies qui va être mis en place devrait permettre de diversifier les sources de revenu des futurs retraités. En même temps, il est difficile de dire combien de personnes décideront de transférer une partie de leurs cotisations vers le nouveau régime et quelles retombées cela aura sur les recettes du régime à prestations définies. Par ailleurs, il faudrait faire attention aux frais administratifs du nouveau régime, car ces charges peuvent avoir une incidence non négligeable sur les taux futurs de remplacement et donc sur l'adhésion du public. Compte tenu du rôle accru dévolu à l'épargne-retraite privée, il faut aussi améliorer les connaissances financières de la population. Dans le domaine de la santé, les autorités ont l'intention de continuer à améliorer graduellement le modèle à assureurs multiples, avec des mesures progressives visant par exemple à limiter les dépenses en médicaments et à perfectionner le système de paiement des prestataires. Il faudrait explorer les possibilités de gains d'efficience dans la planification du réseau de santé et dans la gestion des soins, tout en veillant à offrir aux assureurs et aux prestataires de soins les incitations qui conviennent. Ce document de travail se rapporte à l’Étude économique de l’OCDE sur la République tchèque 2011, www.oecd.org/eco/etudes/tcheque. |
| Keywords: | budgets, public finances, pensions, health care, Czech Republic, fiscal frameworks, local governments, finances publiques, soins de santé, République tchèque, collectivités locales, cadre budgétaire |
| JEL: | H51 H55 H57 H61 H72 |
| Date: | 2011–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:922-en&r=age |
| By: | Purvi Sevak (Hunter College); Lucie Schmidt (Williams College) |
| Abstract: | Economic theory suggests that individual decisions about consumption, saving, and labor supply should be directly linked to subjective expectations about future events. This project uses panel data from the Health and Retirement Study from 1994-2008 merged to data on a number of local and high frequency macroeconomic indicators to estimate how individual expectations respond to fluctuations in the local and national macroeconomy. Our results suggest that individuals revise their expectations in response to both local and national macroeconomic fluctuations in ways that appear to make sense, and that this is stronger for respondents with higher levels of education. |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp259&r=age |
| By: | Felix R. FitzRoy; Michael A. Nolan; Max F. Steinhardt; David Ulph |
| Abstract: | In a simple 2-period model of relative income under uncertainty, higher comparison income for the younger cohort can signal higher or lower expected lifetime relative income, and hence either increase or decrease well-being. With data from the German Socio-Economic Panel and the British Household Panel Survey, we first confirm the standard negative effects of comparison income on life satisfaction with all age groups, and many controls. However when we split the West German sample by age we find a positive significant effect of comparison income in the under 45s, and the usual negative effect only in the over 45 group. With the same split in UK and East German data, comparison income loses significance, which is consistent with the model prediction for the younger group. Our results provide first evidence that the standard aggregation with only a quadratic control for age can obscure major differences in the effects of relative income. |
| Keywords: | Subjective life-satisfaction, comparison income, reference groups, age, welfare |
| JEL: | D10 I31 J10 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp415&r=age |
| By: | Lena Calahorrano; Philipp an de Meulen |
| Abstract: | We investigate the effect of population aging on international factor flows in a political-economy framework. Political barriers to immigration in developed countries and insecure property rights in developing countries impede factor flows. Taking into account different generations’ conflicting attitudes towards immigration and expropriation, we explore how these policy barriers interact. We find that incentives to expropriate increase as more emigration from the developing country takes place. Meanwhile, the industrialized country admits less immigrants as less capital is allocated to the developing country. Furthermore, the effects of population aging on international factor flows are considerably underestimated if one does not take into consideration the interactions between immigration and expropriation policies. |
| Keywords: | Demographic change; political economy; migration; foreign direct investment |
| JEL: | D78 F21 F22 J10 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0299&r=age |
| By: | Mariacristina De Nardi; Eric French; John Bailey Jones; Angshuman Gooptu |
| Abstract: | We describe the Medicaid eligibility rules for the elderly. Medicaid is administered jointly by the Federal and state governments, and each state has significant flexibility on the details of the implementation. We document the features common to all states, but we also highlight the most salient state-level differences. There are two main pathways to Medicaid eligibility for people over age 65: either having low assets and income, or being impoverished due to large medical expenses. The first group of recipients (the categorically needy) mostly includes life-long poor individuals, while the second group (the medically needy) includes people who might have earned substantial amounts of money during their lifetime but have become impoverished by large medical expenses. The categorically needy program thus only affects the savings decision of people who have been poor throughout most of their lives. In contrast, the medically needy program provides some insurance even to people who have higher income and assets. Thus, this second pathway is to some extent going to affect the savings of the relatively higher income and assets people. |
| JEL: | H1 H31 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17689&r=age |