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on Economics of Ageing |
| By: | Sánchez-Romero, Miguel; Sambt, Jože; Prskawetz, Alexia |
| Abstract: | This paper investigates the role of recent pension reforms for the development of the social security system and economic growth in Austria. We use a computable general equilibrium model that is built up of overlapping generations that differ by their household structure, longevity, educational attainment, and capital accumulation. Each household optimally decides over its consumption paths, work effort, and retirement age according to the life-cycle theory of labor, while they face survival risk. We find that the pension reforms implemented from 2000 to 2004, although in the correct direction, are not sufficient to solve the labor market distortion caused by the Austrian PAYG pension system. Using alternative policy options, our simulations indicate that a change to a notional defined contribution system and an increase in the educational distribution of the work force would increase the incentive for later retirement ages and thereby increase labor supply and economic growth. -- |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuweco:042012&r=age |
| By: | Kuhn, Michael; Wrzaczek, Stefan; Prskawetz, Alexia; Feichtinger, Gustav |
| Abstract: | We examine within a life-cycle set-up the simultaneous choice of health care and retirement (together with consumption), when health care contributes to both a reduction in mortality and in morbidity. Health tends to impact on retirement via morbidity, determining the disutility of work, and through longevity, determining the need to accumulate retirement wealth. In contrast, the age of retirement drives health through changes in the value of survival and the value of morbidity reductions. We apply our model to analyse the effects of moral hazard in the annuity market: While moral hazard always induces excessive health investments and an excessive duration of working life it also triggers an excessive level of consumption if the impact of health on the disutility of work is sufficiently large. We examine a transfer scheme and mandatory retirement as policies to curtail moral hazard. Numerical analysis illustrates the working of our model. -- |
| Keywords: | annuities,demand for health,moral hazard,life-cycle-model,optimal control,retirement,value of life |
| JEL: | D91 I12 J26 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuweco:012012&r=age |
| By: | Fehr, Hans; Uhde, Johannes |
| Abstract: | The present paper aims to quantify efficiency properties of real world social security systems of various institutional designs in order to identify an optimal pension design. Starting from a benchmark economy without social security, we introduce alternative pension systems and compare the costs arising from liquidity constraints as well as labor and savings distortions versus the benefits from insurance provision against income and lifespan uncertainty. Our findings highlight strong efficiency losses arising from both means-testing pension benefits against private assets and restricting the contribution base while indicating a positive impact of means-testing flat benefits against earnings-related benefits within pension systems resting on several tiers. Furthermore, our results suggest that the negative correlation between pension progressivity and pension generosity may be justified on efficiency grounds. In our model a single-tier universal earnings-related pension system yields the highest efficiency gains dominating flat benefits as well as two-tier systems of any form. -- |
| JEL: | C68 H55 H31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc12:62024&r=age |
| By: | Annamaria Lusardi; Pierre-Carl Michaud; Olivia S. Mitchell |
| Abstract: | While financial knowledge is strongly positively related to household wealth, there is also considerable cross-sectional variation in both financial knowledge and net asset levels. To explore these patterns, we develop a calibrated stochastic life cycle model featuring endogenous financial knowledge accumulation. The model generates substantial wealth inequality, over and above that of standard life cycle models; this is because higher earners typically have more hump-shaped labor income profiles and lower retirement benefits which, when interacted with precautionary saving motives, boost their need for private wealth accumulation and thus financial knowledge. Our simulations show that endogenous financial knowledge accumulation has the potential to account for a large proportion of wealth inequality. The fraction of the population which is rationally financially “ignorant” depends on the generosity of the retirement system and the level of means-tested benefits. Educational efforts to enhance financial savvy early in the life cycle so as to produce one percentage point excess return per year would be valued highly by people in all educational groups. |
| JEL: | D01 D1 D31 D83 D91 E21 G11 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18669&r=age |
| By: | Lang, Julia |
| Abstract: | This paper reports the effects of training participation on wages and perceived job security for employees of different ages. Based on data from the German Socio-Economic Panel, results indicate that only younger workers benefit from training by an increase in wages, whereas older employees worries about losing their job are reduced. This observation can also be explained by the fact that goals of training courses are related to the age of participants. Moreover, I differentiate between workers who permanently and only occasionally participate in training. The results indicate that there seem to be decreasing marginal returns to training with respect to job security. -- |
| JEL: | J24 J28 J31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc12:62073&r=age |
| By: | Hammer, Bernhard; Prskawetz, Alexia |
| Abstract: | There is a strong interdependency between public transfers and the shape of the economic life-cycle. Austria and Sweden are very similar economies in terms of production, income and the size of the public sector. There are however remarkable differences in the design of public transfers, their distribution over age-groups and consequently in the shape of the average economic life-cycle: One of the most remarkable differences is the earlier labour force exit age in Austria. The period of active labour force participation is consequently more compressed in Austria, leading to higher contributions to the public transfer system for the age-groups 20-45 and to a higher share of public transfers directed to the elderly. Using economic dependency ratios we show that the sustainability of the public transfer system depends less on its size than on its design: The Swedish system collects the contributions from a wider range of age-groups, transfers a smaller share to the elderly and provides more support to younger generations, supporting them to invest in own children. These characteristics have a positive effect on the sustainability of the Swedish system: Although in Sweden there is a larger share of the population in the age-group 60+, the total economic dependency of the elderly is lower. -- |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuweco:052012&r=age |
| By: | Ana Cortez |
| Abstract: | Demographic dynamics have strong repercussions for development and need to be addressed in the definition of the global development strategy for post 2015. Despite divergent trends across countries, international migration offers no definitive solution. A comprehensive approach is needed. Countries with declining and ageing workforces need to sustain or raise productivity. Countries with growing labour forces need to embark in growth patterns that are labour intensive, offer possibilities for dynamic structural change and productivity increases. Both cases require investments in education, skill formation and upgrading. The impact of population ageing on economic variables is nuanced but should not be ignored. |
| Keywords: | population, ageing, pension systems, poverty, labour force, productivity, dependent populations, migration, fertility |
| JEL: | I3 J11 J21 J24 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:une:wpaper:122&r=age |
| By: | Roeder, Kerstin; Habla, Wolfgang |
| Abstract: | We analyze the German ecotax package in a model of overlapping generations and majority voting. The package consists of the ecotax rate and the budgetary rule which assigns a fraction of the tax revenue to the reduction of pension contributions while holding pension benefits constant. The old and the young generation have different preferences with respect to the tax rate and the use of the tax revenue. Our theoretical model as well as the calibration of our model show that the median voter s preferred tax rate may well exceed the efficient tax rate whenever his income is sufficiently high. This is the likelier the more CO2 is degraded and removed from the atmosphere. Furthermore, the median voter prefers earmarking of tax revenue to reductions in pension contributions. The latter is quite an accurate prediction of the situation in Germany where the share of tax revenue devoted to the pension scheme amounts to more than 90%. -- |
| JEL: | H23 H55 D78 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc12:62060&r=age |
| By: | Wößmann, Ludger; Hanushek, Eric A.; Zhang, Lei |
| Abstract: | Policy debates about the balance of vocational and general education programs focus on the school-to-work transition. But with rapid technological change, gains in youth employment from vocational education may be offset by less adaptability and thus diminished employment later in life. To test our main hypothesis that any relative labor-market advantage of vocational education decreases with age, we employ a difference-in-differences approach that compares employment rates across different ages for people with general and vocational education. Using micro data for 18 countries from the International Adult Literacy Survey, we find strong support for the existence of such a trade-off, which is most pronounced in countries emphasizing apprenticeship programs. Results are robust to accounting for ability patterns and to propensity-score matching. -- |
| JEL: | J24 I20 J64 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc12:62070&r=age |
| By: | David Cheban (State University of Moldova); Cristiana Mammana (University of Macerata); Elisabetta Michetti (University of Macerata) |
| Abstract: | The article is devoted to the study of global attractors of quasi-linear non-autonomous difference equations. The results obtained are applied to the study of a two-dimensional triangular growth model of Solow type with Variable Elasticity of Substitution production function and endogenous population growth rate described by the Beverton-Holt equation. |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:mcr:wpdief:wpaper00069&r=age |
| By: | Kuhn, Michael; Prettner, Klaus |
| Abstract: | We study the effects of a labor-intensive health care sector within an R&D-driven growth model with overlapping generations. Health care increases longevity and labor participation/productivity. We examine under which conditions expanding health care enhances growth and welfare. Even if the provision of health care diverts labor from productive activities, it may still fuel R&D and economic growth if the additional wealth that comes with expanding longevity translates into a more capital/machine- intensive final goods production and, thereby, raises the return to developing new machines. We establish mild conditions under which an expansion of health care beyond the growth-maximizing level is Pareto-improving. -- |
| Keywords: | endogenous growth,mortality,(Blanchard) overlapping generations,health care,research and development,sectoral composition |
| JEL: | I15 I18 O11 O41 O43 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuweco:032012&r=age |