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on Economics of Ageing |
| By: | Kadir Atalay and Garry F. Barrett |
| Abstract: | Identifying the effect of the financial incentives created by social security systems on the retirement behaviour of individuals requires exogenous variation in program parameters. In this paper we study the 1993 Australian Age Pension reform which increased the eligibility age for women to access the social security benefit. We find economically significant responses to the increase in the Age Pension eligibility age. An increase in the eligibility age of 1 year induced a decline in retirement probability by approximately 10 percent. In addition, we find that the social security reform induced significant "program substitution." The rise in the Age Pension eligibility age had an unintended consequence of increasing enrolment in other social insurance programs, particularly the Disability Support Pension, which functioned as an alternative source for funding retirement. |
| Keywords: | Retirement, age pension, program substitution |
| JEL: | D91 I38 J26 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:sedapp:295&r=age |
| By: | Lynn McDonald; Peter Donahue |
| Abstract: | In this paper we raise the question, as to whether retirement is lost as we currently know it in Canada. Here we look at the retirement research according to the scope of retirement and the new retirement, possible theoretical developments, the timing of transitions into retirement and life as a retiree including the quality of pensions. On the basis of this selected review we propose that retirement is undergoing modifications based on several trends that commenced before the 2008 economic downturn. The data would appear to lean towards the emergence of a different retirement, insofar as the collective Canadian vision of retirement is lost, notwithstanding the economic meltdown in global markets. |
| Keywords: | Retirement, pension shift, retirement planning, work and retirement, pension policy, retirement theory, retirement and the life course |
| JEL: | Z10 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:sedapp:291&r=age |
| By: | Pfau, Wade Donald; Kariastanto, Bayu |
| Abstract: | This article simulates the savings rates required to meet retirement income goals in the worst-case scenario from overlapping historical periods for savers in 19 developed market countries. In the baseline, workers save for 30 years to replace 50 percent of their pre-retirement net income with subsequent inflation adjustments over a 30-year retirement. Public pension benefits would be added to this. The worst-case scenario saving rates ranged across the countries from 16.3 percent to 74.3 percent. Americans enjoyed the best worst-case savings scenario, and a broader international perspective suggests more caution may be needed when formulating retirement planning guidance. |
| Keywords: | safe saving rate; retirement planning; historical simulation; developed countries |
| JEL: | G11 C15 D14 |
| Date: | 2012–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39066&r=age |
| By: | Lisenkova, Katerina |
| Abstract: | Ukraine has a rapidly ageing and declining population. A dynamic forward-Âlooking Computable General Equilibrium (CGE) model with an explicitly modelled Payâ€Asâ€You-ÂGo pension scheme is constructed to perform simulations of different pension reform scenarios and investigate the impact of population ageing on a wide range of macroeconomic variables. It is shown that, changes in age structure will result in a significant negative impact on the economy and stability of the pension system. Analysis of the potential changes to the pension system is limited to modelling an increase of the pension age, keeping either the workers’ contribution rate or replacement rate constant. |
| Keywords: | Ukraine, CGE modelling, pension reform, ageing, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:278&r=age |
| By: | Garry F. Barrett and Milica Kecmanovic |
| Abstract: | Does retirement represent a state of relative prosperity or a time of unanticipated economic hardship? To assess whether individuals are successful in smoothing their well-being across the transition to retirement we analyse measures of relative subjective wellbeing (SWB) in the Australian HILDA Survey. Specifically, this research examines individual's self-reported change in their standard of living, financial security, and overall happiness over the transition to retirement. It is found SWB either improves or remains constant for the large majority of individuals as they retire from the labour force. However, there are significant disparities in changes in well-being with retirement among retirees. In particular, the subset of individuals who are forced to retire early due to job loss or their own health, and who find their income in retirement to be much less than expected, report marked declines in their well-being in retirement. |
| Keywords: | Retirement, subjective well-being, welfare, income expectations |
| JEL: | D91 I31 J26 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:sedapp:296&r=age |
| By: | Belke, Ansgar (University of Duisburg-Essen); Dreger, Christian (DIW Berlin); Ochmann, Richard (DIW Berlin) |
| Abstract: | This paper investigates the relationship between wealth, ageing and saving behaviour of private households by using pooled cross sections of German consumption survey data. Different components of wealth are distinguished, as their impact on the savings rate is not homogeneous. On average, the effect attributed to real estate dominates the other components of wealth. In addition, the savings rate strongly responds to demographic trends. Besides the direct impact of the age structure, an indirect effect arises through the accumulation of wealth. The savings rate does not decrease with age in a monotonic way, as the permanent income hypothesis suggests. Most prominently, older households tend to increase their savings in the second half of their retirement period, probably due to bequest motives and increasing immobility. Given the ongoing demographic trend, an increase of 1.4 percentage points in the aggregated savings rate should be expected over the next two decades. |
| Keywords: | demographic change, wealth, savings |
| JEL: | G10 G11 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6567&r=age |
| By: | Hu, Yuwei (Asian Development Bank Institute) |
| Abstract: | Pension assets have seen rapid growth world-wide over the past decades, although they suffered large losses during the global financial crisis of 2007–2008. This paper seeks to identify the impact of Asian pension funds on selected key transmission mechanisms from pension reform to financial development. Utilizing a panel error correction model, we found a statistical relationship between pension asset growth and development of financial and capital markets. The main policy implication is that governments in Asia should continue and/or strengthen pension reforms towards more pre-funding of future liabilities, since it brings beneficial impacts on the financial market. |
| Keywords: | asia; pension systems; asian pension funds; pension reform |
| JEL: | C54 G23 G28 |
| Date: | 2012–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0360&r=age |
| By: | Chen, Yu-Fu; Zoeg, Gylfi |
| Abstract: | It has been observed that university professors sometimes become less research active in their later years. This paper models the decision to become inactive as a utility maximising problem under conditions of uncertainty and derives an age-dependent activity condition for the level of research productivity. The model implies that professors who are close to retirement age are more likely to become inactive when faced with setbacks in their research while those who continue research do not lower their activity levels. Using data from the University of Iceland, we find support for the model’s predictions. The model suggests that universities should induce their older faculty to remain research active by striving to make their research more productive and enjoyable, maintaining peer pressure, reducing job security and offering higher performance related pay. |
| Keywords: | Inactivity, aging, optimal stopping, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:268&r=age |
| By: | Stephan Humpert; Christian Pfeifer |
| Abstract: | This paper takes a labor supply perspective (neoclassical labor supply, job search) to explain the lower employment rates of older workers and women. The basic rationale is that workers choose non-employed if their reservation wages are larger than the offered wages. Whereas the offered wages depend on workers' productivity and firms' decisions, reservation wages are largely determined by workers' endowments and preferences for leisure. To shed some empirical light on this issue, we use German survey data to analyze age and gender differences in reservation and entry wages, preferred and actual working hours, and satisfaction with leisure and work. |
| Keywords: | Age, family gap, gender, job search, labor supply, reservation wages |
| JEL: | J14 J22 J64 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp449&r=age |
| By: | Asgeir Danielsson |
| Abstract: | This paper contributes to the discussion of effects of mandatory pension savings and house price risk on aggregate household savings, homeownership, and risks in lending to homeowners. The analysis is theoretical and based on the life-cycle hypothesis. It is shown that mandatory pension savings based on defined benefits will increase risk in lending to homeowners. Households that remain homeowners will increase their personal savings while those that prefer renting will decrease their savings as renters take on less risk from house price volatility than homeowners. The relative size of the two effects on savings depends on households‘ preferences over homeownership and renting. The assets of the mandatory pension funds in Iceland are among the highest in the world. This country also scores very high in homeownership with around 80% of households living in own homes. For these reasons data on the Icelandic pension system and on homeownership in this country provide a convenient background for discussion of the theoretical issues. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:ice:wpaper:wp58&r=age |
| By: | Martin Browning (University of Oxford and Institute for Fiscal Studies); Thomas Crossley (Koc University, Institute for Fiscal Studies and University of Cambridge); Melanie Lührmann (Royal Holloway, University of London and Institute for Fiscal Studies) |
| Abstract: | We investigate the life cycle patterns of households' spending on medium value durables. We use panel data on expenditures on appliances and consumer electronics the British Household Panel Study between 1997 and 2008. In cross section, expenditures for appliances and consumer electronics decrease strongly as households age. We show that this is entirely attributable to cohort effects and that when such effects are properly modelled, expenditure on consumer electronics rises with age. We also document important demand effects of household composition, labour supply and health status. |
| Keywords: | life cycle model, consumer behaviour, durables. |
| JEL: | D12 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1213&r=age |
| By: | Thierry Madiès (University of Fribourg, Bd de Pérolles 90, CH-1700 Fribourg, Switzerland); Marie-Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Malgorzata Wasmer (University of Fribourg, Bd de Pérolles 90, CH-1700 Fribourg, Switzerland) |
| Abstract: | We study the attitudes of junior and senior employees towards strategic uncertainty and competition, by means of a market entry game inspired by Camerer and Lovallo (1999). Seniors exhibit higher entry rates compared to juniors, especially when earnings depend on relative performance. This difference persists after controlling for attitudes towards non-strategic uncertainty and for beliefs on others’ competitiveness and ability. Social image matters, as evidenced by the fact that seniors enter more when they predict others enter more and when they are matched with a majority of juniors. This contradicts the stereotype of risk averse and less competitive older employees. |
| Keywords: | Aging, risk, ambiguity, competitiveness, self-image, confidence, experiment |
| JEL: | C91 D83 J14 J24 M5 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1217&r=age |