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on Economics of Ageing |
| By: | Alan L. Gustman; Thomas L. Steinmeier; Nahid Tabatabai |
| Abstract: | A review of the literature suggests that when pension values are measured by the wealth equivalent of promised DB pension benefits and DC balances for those approaching retirement, pensions account for more support in retirement than is suggested when their contribution is measured by incomes received directly from pension plans by those who have already retired. Estimates from the Health and Retirement Study (HRS) for respondents in their early fifties suggest that pension wealth is about 86 percent as valuable as Social Security wealth. In data from the Current Population Survey (CPS), for members of the same cohort, measured when they are 65 to 69, pension incomes are about 56 percent as valuable as incomes from Social Security. Our empirical analysis uses data from the Health and Retirement Study to examine the reasons for these differences in the contributions of pensions as measured in income and wealth data. A number of factors cause the contribution of pensions to be understated in retirement income data, especially data from the CPS. One factor is a difference in methodology between surveys affecting what is included in pension income, especially in the CPS, which ignores irregular payments from pensions. In CPS data on incomes of those ages 64 to 69 in 2006, pension values are 59 percent of the value of Social Security. For the same cohort, in HRS data, the pension value is 67 percent of the value of Social Security benefits. Some pension wealth “disappears” at retirement because respondents change their pension into other forms that are not counted as pension income in surveys of income. Altogether, 16 percent of pension wealth is transformed into some other form at the time of disposition. For those who had a defined benefit pension just before termination, the dominant plan type for current retirees, at termination 12 percent of the benefit was transformed into a state that would not count as pension income after retirement. For those who receive benefits soon after termination, there is a 3.5 percent reduction in DB pension value at termination compared to the year before termination. One reason may be the form of annuitization that is chosen. A series of caveats notwithstanding, the bottom line is that CPS data on pension incomes received in retirement understates the full contribution pensions make to supporting retirees. |
| JEL: | D31 E21 H55 I3 J14 J26 J32 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18542&r=age |
| By: | Elena Stancanelli (Centre d'Economie de la Sorbonne, OFCE SciencesPo and IZA) |
| Abstract: | Earlier studies conclude that spouses time their retirement closely together. Here, we exploit early retirement age legislation to identify the effect of own and spousal retirement on spouses' hours of work. The sample for the analysis includes over 85000 French couples. We conclude that hours of work fall significantly upon own and partner's retirement, for both spouses. The own effect is dramatically large and equal to a drop in hours worked of 65 to 77 per cent while the cross effects are small, suggesting an average reduction of one or two hours per week upon spousal retirement. |
| Keywords: | Ageing, retirement, regression discontinuity, policy evaluation. |
| JEL: | J14 C1 C36 D04 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:12074&r=age |
| By: | Matthew S. Rutledge |
| Abstract: | Workers over age 55 with chronic health conditions must choose between applying for Social Security Disability Insurance (SSDI) benefits or continuing to work until their Social Security retirement benefits become available. Previous research has investigated the influence of macroeconomic conditions on disability application and, separately, on retirement claiming. This project uses data from the Survey of Income and Program Participation Gold Standard File to determine whether there is a relationship between national and state unemployment rates and disability applications, taking into account the current or future receipt of Social Security retirement benefits. First, reduced-form estimates indicate that retirement beneficiaries are more likely to apply for SSDI as unemployment increases – and, conversely, eligible individuals who have not yet claimed benefits are less likely to apply when unemployment rises. But after accounting for unobserved characteristics associated with both the decision to apply for disability insurance and Social Security benefits, individuals are no more likely to apply for disability benefits when unemployment is high. Second, we find that the probability of SSDI application among individuals age 55-61 is unrelated to macroeconomic conditions and unrelated to proximity to one’s 62nd birthday. These results suggest that, unlike prime-age adults, the decision among older individuals to apply for disability is based primarily on health, and not financial incentives. |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2012-26&r=age |
| By: | William B.P. Robson (C.D. Howe Institute); Alexandre Laurin (C.D. Howe Institute) |
| Abstract: | While Ottawa's proposed reforms to the pension plans of federal employees and MPs are a move in the right direction, the deep flaws in these plans require more fundamental revisions. The authors argue argue that more sweeping reforms are needed to achieve better funding and a more reasonable division of obligations and risks between taxpayers and public servants. The guaranteed incomes those plans promise participants are far more valuable, and their costs and obligations on taxpayers are far larger, than reported. Currently before Parliament, the new provisions include increasing employee contributions to the plans and raising eligibility ages for new employees' benefits. But the flaws in Ottawa's employee pension plans are so serious that these steps should - and almost certainly will - not be the end of the journey. |
| Keywords: | Pension Policy, Governance and Public Institutions, Canada, pension plan reforms, Public Service (PS) pension plan, MPs' pension plan |
| JEL: | H55 J32 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:cdh:ebrief:140&r=age |
| By: | Frieder R. Lang; David Weiss; Denis Gerstorf; Gert G. Wagner |
| Abstract: | Anticipating one’s future self is a unique human capacity that contributes importantly to adaptation and health throughout adulthood and old age. Using the adult lifespan sample of the national German Socio-Economic Panel (SOEP; N > 10,000, age range 18-96 years), we investigated age-differential stability, correlates, and outcomes of accuracy in anticipation of future life satisfaction across six subsequent 5-year time intervals. As expected, we observed few age differences in current life satisfaction, but stronger age differences in future expectations: Younger adults anticipated improved future life satisfaction, overestimating their actual life satisfaction 5 years later. By contrast, older adults were more pessimistic about the future, generally underestimating their actual life satisfaction after 5 years. Such age differences persisted above and beyond the effects of self-rated health and income. Survival analyses revealed that in later adulthood, underestimating one’s life satisfaction 5 years later was related to lower hazard ratios for disability (n = 735 became disabled) and mortality (n = 879 died) across 10 or more years, even after controlling for age, sex, education, income, and self-rated health. Findings suggest that older adults are more likely to underestimate their life satisfaction in the future, and that such underestimation was associated with positive health outcomes. |
| Keywords: | Subjective well-being, future anticipation, optimism, aging, health, mortality, disability, SOEP |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp502&r=age |
| By: | Claudio A Agostini (Escuela de Gobierno, Universidad Adolfo Ibáñez) |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:uai:wpaper:wp_025&r=age |
| By: | Elizabeth M. Caucutt; Thomas F. Cooley; Nezih Guner |
| Abstract: | We study the social, demographic and economic origins of social security. The data for the U.S. and for a cross section of countries suggest that urbanization and industrializa- tion are associated with the rise of social insurance. We describe an OLG model in which demographics, technology, and social security are linked together in a political economy equilibrium. In the model economy, there are two locations (sectors), the farm (agricul- tural) and the city (industrial) and the decision to migrate from rural to urban locations is endogenous and linked to productivity differences between the two locations and survival probabilities. Farmers rely on land inheritance for their old age and do not support a pay- as-you-go social security system. With structural change, people migrate to the city, the land loses its importance and support for social security arises. We show that a calibrated version of this economy, where social security taxes are determined by majority voting, is consistent with the historical transformation in the United States. |
| Keywords: | Social Security, Political Economy, Structural Change, Migration |
| JEL: | H55 H3 D72 |
| Date: | 2012–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:923.12&r=age |
| By: | Tindara Addabbo; Marco Fuscaldo; Anna Maccagnan |
| Abstract: | This paper deals with the definition of the capability of living a healthy life with special reference to the Italian context. The increasing ageing of Italian population and the higher likelihood for elderly to experience poorer health conditions (Addabbo, Picchio; 2010; Addabbo, Chiarolanza, Fuscaldo, Pirotti, 2010) lead us to focus especially on elderly population and gender differences in the measurement of the development of this capability. Institutional as well family and individual conversion factors are analysed in their interaction with the observed development of the capability of living a healthy life taking a gender perspective. To measure the latter we use both self assessed health status and objective gerontological measures of health conditions available in the Italian sample of the Survey of Health, Ageing, Retirement in Europe (SHARE). The self-completion questionaire, that is submitted only to a part of the whole SHARE sample, allows to gain important information on the household characteristics and in particular on the sharing of different responsibilities within the household (doing the cleaning, caring for children and elderlies, earning money etc.). Part of this information is also retrospective. This allows us to extend our analysis on the measurement of individual current achievement in the capability taking into account how conversion factors can interact with the development of the capability since it allows a long term analysis of their effect. |
| Keywords: | health |
| JEL: | I14 J14 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:mod:cappmo:0099&r=age |
| By: | Aoki, Reiko |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cisdps:576&r=age |
| By: | Hippolyte d'Albis (Centre d'Economie de la Sorbonne - Paris School of Economics); Loesse Jacques Esso (ENSEA - Abidjan); Héctor Pifarré i Arolas (Toulouse School of Economics - LERNA) |
| Abstract: | This work is devoted to the study of the variations of mortality patterns across a sample of high-income countries since 1960. We study changes in age-at-death distributions through two indicators, life expectancy and Gini coefficient, by applying econometric tools commonly used in the economic growth literature to assess the existence of convergence across the countries in our sample. We contribute to the ongoing debate over the existence of convergence amongst high-income countries in adult mortality by offering two main empirical regularities. First, our results show that the convergence hypothesis is rejected when we consider the entire sample of industrialized countries. Second, we provide evidence of convergence in both the life expectancy and Gini coefficient among a subset of countries and for some subperiods. This constitutes preliminary evidence against the convergence to a common age-at-death stationary distribution but of the existence of convergence clubs. |
| Keywords: | Age-at-death distributions, convergence. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:12076&r=age |
| By: | Hiroshi Fujiki (Associate Director-General and Senior Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: hiroshi.fujiki@boj.or.jp)); Naohisa Hirakata (Director and Senior Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: naohisa.hirakata@boj.or.jp)); Etsuro Shioji (Professor, Graduate School of Economics, Hitotsubashi University (E-mail: shioji@econ.hit-u.ac.jp)) |
| Abstract: | Using Japanese household survey data from 2007 to 2010, we examine how household age, income, financial assets, and education affect the tendency to participate in the stock market. Our analysis suggests that the probability of stock market participation correlates weakly with age, holding constant other household characteristics, including the preference toward online financial transactions. The share of stocks in total household financial assets correlates positively with age, holding constant the other variables listed above. Our results suggest that older households tend to have more stocks than younger households, but this is mainly because older households have more financial assets on average than younger households: the effects of age per se are statistically significant but small in size. |
| Keywords: | Stockholding Puzzle, Participation, Online Financial Transactions |
| JEL: | C34 C35 D12 E21 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ime:imedps:12-e-17&r=age |
| By: | M. Cadoni; Roberta Melis; A. Trudda |
| Abstract: | It has been debated that pension funds should have limitations on their asset allocation, based on the risk profile of the different financial instruments available on the financial markets. This issue proves to be highly relevant at times of market crisis, when a regulation establishing limits to risk taking for pension funds could prevent defaults. In this paper we present a framework for evaluating the risk level of a single financial instrument or a portfolio. By assuming that asset returns can be described by a multifractional Brownian motion, we evaluate the risk using the time dependent Hurst parameter H(t) which models volatility. To provide a measure of the risk, we model the Hurst parameter with a random variable with beta distribution. We prove the efficacy of the methodology by implementing it on different risk level financial instruments and portfolios. |
| Keywords: | Pension Funds; risk control; multifractional Brownian motion |
| JEL: | C22 G11 G23 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201231&r=age |
| By: | Frank R. Lichtenberg |
| Abstract: | We investigate the effect of the vintage (year of FDA approval) of the prescription drugs used by an individual on his or her survival and medical expenditure. When we only control for age, sex, and interview year, we estimate that a one-year increase in drug vintage increases life expectancy by 0.52%. Controlling for other variables including activity limitations, race, education, family income as a percent of the poverty line, insurance coverage, Census region, BMI, smoking and over 100 medical conditions has virtually no effect on the estimate of the effect of drug vintage on life expectancy. Between 1996 and 2003, the mean vintage of prescription drugs increased by 6.6 years. This is estimated to have increased life expectancy of elderly Americans by 0.41-0.47 years. This suggests that not less than two-thirds of the 0.6-year increase in the life expectancy of elderly Americans during 1996-2003 was due to the increase in drug vintage. The 1996-2003 increase in drug vintage is also estimated to have increased annual drug expenditure per elderly American by $207, and annual total medical expenditure per elderly American by $218. This implies that the incremental cost-effectiveness ratio (cost per life-year gained) of pharmaceutical innovation was about $12,900. |
| JEL: | I12 J11 O33 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18552&r=age |
| By: | Kahlenberg, Christoph (Randstad); Spermann, Alexander (University of Freiburg) |
| Abstract: | Demographic change is perceived as a threat for wealth rather than a challenge in Germany. The debate on skilled labor shortage is a proof for this view. The paper surveys the most important German studies on skilled labor shortage. Meanwhile, a consensus on solutions has emerged in academia. Increasing the participation rates of elderly, women and facilitating qualified immigration as well as improving productivity are the mainstream recommendations. The paper provides descriptive statistical evidence that temporary agency work could contribute to solve the skilled labor shortage problem via these four channels. However, it is far from clear that productivity increases are the most important and most sustainable way out of the demographic trap. Against this background the government's demographic strategy is assessed. It turns out that the government has not a coherent strategy yet to solve the demographic issues ahead. |
| Keywords: | demography in Germany, qualification, training, temporary agency work |
| JEL: | I2 J2 J4 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp48&r=age |
| By: | Spagnolo, Giancarlo (Stockholm Institute of Transition Economics); Bergman, Mats A. (Södertörn University); Lundberg, Sofia (Umeå University) |
| Abstract: | Many quality dimensions are hard to contract upon and are at risk of degradation when services are procured rather than produced in-house. However, procurement may foster performance-improving innovation. We assemble a large data set on elderly care services in Sweden between 1990 and 2009, including survival rates - our measure of non-contractible quality - and subjectively perceived quality of service. We estimate how procurement from private providers affects these measures using a difference-in-difference approach. The results indicate that procurement significantly increases non-contractible quality as measured by survival rate, reduces the cost per resident but does not affect subjectively perceived quality. |
| Keywords: | elderly care; incomplete contracts; limited enforcement; mortality; non-contractible quality; outsourcing; nursing homes; performance measurement; perceived quality; privatization; procurement. |
| JEL: | H57 I18 L33 |
| Date: | 2012–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hasite:0019&r=age |
| By: | E. J. Wilson (Asian Development Bank Institute (ADBI)); K. Jayanthakumaran; R. Verma |
| Abstract: | This paper considers two major issues that need to be treated as matters of urgency. First, internal (within country) migrations in the Asian (ACI) region are mostly undocumented and large. It is shown there are significant differences in wages and human development measures to which migrants will respond. Our first (of two) recommendation(s) is the need to collect better information on migration and for wage premiums and discounts to be estimated across sectors and countries. The second major issue is the emerging demographic imbalances in the form of aging, which will give dependency ratios that have never been experienced in all of recorded human existence. This needs urgent attention and the development of appropriate migration policies. Whilst it is possible to share the burdens of ageing and dependency through migration, this will not happen under present arrangements. Migration cannot continue to be treated differently to trade and finance. A framework needs to be developed to provide a coherent set of policies relating to migration and social welfare, within and across countries in the Asian region. Our second recommendation is for the East Asia Summit (ASEAN+10) to set up a high level working group to consider possible future harmonized migration based policies, bringing together relevant economic, political, social and legal issues. This should encompass the recent ASEAN leadership on the rights of migrant workers and labor work programs. It complements the Summit’s focus on education and human resource development and heeds the World Economic Forum’s call for Asian leadership in enhancing regional connectivity (expanded to include human resources). As we have argued many times in this paper, increasing the mobility of humans is the best way to not only promote economic efficiency, but to provide freedom and significant improvements in their wellbeing and quality of life. |
| Keywords: | Demographics, Labor Mobility, productivity, human development measures, East Asia Summit, appropriate migration policies |
| JEL: | F22 J31 J61 O15 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:23348&r=age |