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on Economics of Ageing |
| By: | Satoshi Shimizutani; Takashi Oshio; Mayu Fujii |
| Abstract: | This study examined the factors that affect the retirement decisions of the middle-aged and elderly in Japan, focusing especially on their earnings, public pension benefits, and health status. Using two-year panel data from the JSTAR and applying the OV model proposed by Stock and Wise (1990a, 1990b), we found that the probability of retirement has a negative and significant correlation with the OV of work, and that correlation does not depend on the health status. Our counter-factual simulation based on the OV model showed that, if the probability of being enrolled in the disability program were zero, the average years of work when individuals are in their 50s and 60s would increase. However, it should be emphasized that, in Japan—where being enrolled in the disability program is unlikely to make one a candidate for the retirement path—the result of this simulation does not indicate that satisfying the eligibility criteria for disability pension receipts will more stringently increase the labor supplied by the middle-aged and elderly. |
| JEL: | H55 I14 J26 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20001&r=age |
| By: | Randle, Tony; Rudolph, Heinz P. |
| Abstract: | Defined contribution pension systems have faced criticism in the wake of the financial and economic crisis for not delivering adequate and sustainable pension incomes at retirement. Much of the problem has centered around the misalignment of pension fund management companies and the interests of pension fund members, with the focus on short-term volatility rather than delivering adequate pension income over the long term. Although pension fund supervisors in emerging economies have attempted to correct for these market failures, they have not focused sufficiently on the ultimate long-term pension income objective. The paper suggests that in order to have a meaningful impact on future pensions, the supervision of defined contribution pension systems needs to take a more proactive role in minimizing pension risk. This objective would require ensuring that investment risks are aligned with the probability of achieving a target pension at retirement age. The paper also suggests that a proper institutional design of the pension fund industry and intensive use of market surveillance are efficient tools for dealing with most of the operational risks of funded pension fund schemes in emerging economies. |
| Keywords: | Debt Markets,Financial Literacy,Emerging Markets,Mutual Funds,Pensions&Retirement Systems |
| Date: | 2014–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6813&r=age |
| By: | Izabela Styczynska |
| Abstract: | The aim of this work is to present an in depth understanding of the conceptual framework of active ageing policies, which have been created and implemented in Poland. The discussion of active ageing in employment in Poland started relatively late. The first discussions on the unfavourable situation of elderly employment emerged only in the second half of the 1990s, when the debate on the pension system reform started. While only a few ageing policies were developed at the national level during that time, several interesting initiatives were undertaken at a regional level and in the third sector. They were mostly focused on productive ageing and the problems associated with the economic activation of people over 50. The intensive implementation of the active ageing policies in Poland started in 2012, during the European Year of Active Ageing. At present, there is an intense discussion on policies addressed to the elderly, which concentrate not only on the activation of the labour market, but also on healthy, active and socially inclusive ageing, education andcivil engagement. This paper concludes that despite intense work being done by public authorities, the concept still needs a deeper implementation - especially at the regional level. Furthermore, close observation and evaluation of the activation programmes is still missing and the identification and implementation of good practices which are already being developed in other European countries is under-used. |
| Keywords: | Active Ageing, Elderly, Public Policy |
| JEL: | I38 J14 J48 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnstan:0470&r=age |
| By: | Bo Honore (Institute for Fiscal Studies and Princeton); Aureo de Paula (Institute for Fiscal Studies and University College London) |
| Abstract: | This paper introduces a bivariate version of the generalized accelerated failure time model. It allows for simultaneity in the econometric sense that the two realized outcomes depend structurally on each other. The proposed model also has the feasure that it will generate equal durations with positive probability. The motivating example is retirement decisions by married couples. In that example it seems reasonable to allow for the possibility that the each partner's optimal retirement time depends on the retirement time of the spouse. Moreover, the data suggest that the wife and the husband retire at the same time for a non-negligible fraction of couples. Our approach takes as starting point a stylized economic model that leads to a univariate generalized accelerated failure time model. The covariates of that generalized accelerated failure time model act as utility-flow shifters in the economic model. We introduce simultaneity by allowing the utility flow in retirement to depend on the retirement status of the spouse. The econometric model is then completed by assuming that the observed outcome is the Nash bargaining solution in that simple economic model. The advantage of this approach is that it includes independent realizations from the generalized accelerated failure time model as a special case, and deviations from this special case can be given an economic interpretation. We illustrate the model by studying the joint retirement decisions in married couples using the Health and Retirement Study. We provide a discussion of relevant identifying variation and estimate our model using indirect inference. The main empirical nding is that the simultaneity seems economically important. In our preferred specication the indirect utility associated with being retired increases by approximately 5% if one's spouse is already retired and unobservables exhibit positive correlation. The estimated model also predicts that the indirect eect of a change in husbands' pension plan on wives' retirement dates is about 4% of the direct eect on the husbands. |
| JEL: | J26 C41 C3 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:08/14&r=age |
| By: | Mosca, Irene (Trinity College Dublin); Barrett, Alan (ESRI, Dublin) |
| Abstract: | A growing literature within economics has sought to examine the impacts of emigration on sending countries. Some of the studies have looked within families and have investigated how emigration affects those family members who are left behind. In this paper, we explore whether older parents of adult children who emigrate experience declines in mental health compared to parents whose children do not migrate. We use data from the first two waves of The Irish Longitudinal Study on Ageing. This is a nationally representative sample of 8,500 people aged 50 and above living in Ireland collected in 2009-11 (Wave 1) and 2012-13 (Wave 2). To deal with the endogeneity of migration, we apply fixed effects estimation models and control for a broad range of life-events occurring between the two waves. These include the emigration of a child but also events such as bereavement, onset of disease, retirement and unemployment. We find that depressive symptoms and feelings of loneliness increase among the parents of migrant children but that the effect is only present for mothers. Given the relationship between mental health and other health outcomes, the potential impacts for the older populations of migrant-sending regions and countries are significant. |
| Keywords: | emigration, depression, mental health |
| JEL: | I15 J61 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8037&r=age |
| By: | Purvi Sevak; Lucie Schmidt |
| Keywords: | Health, Retirement, Immigrants, Disability |
| JEL: | I J |
| Date: | 2014–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:8069&r=age |
| By: | Wellner, Konstantin; Herstatt, Cornelius |
| Abstract: | The existing research on the behavior of user innovators has focused almost exclusively on younger users. In light of the demographic shift and the increasing importance of the Silver Market segment (customers 55 years plus), we analyzed whether important determinants of user innovator behavior (use experience, product knowledge, technical expertise, and the lead user components) exert the same influence among older users. We conducted a study in the camping and caravanning industry and included 333 respondents from 19 to 86 years of age. The innovator share among older users was slightly lower (43 % vs. 57 %). While use experience and product knowledge turned out less important for older users in our sample, technical expertise materialized as the most important determinant. Additionally, being ahead of trend is stronger related to dissatisfaction with existing products among older users. We found additional evidence that users with high use experience suffer from functional fixedness. -- |
| Keywords: | user innovation,lead user,Silver Market,age,use experience,technical expertise,product knowledge,determinants |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuhtim:81&r=age |
| By: | Bruno Amable (Centre d'Economie de la Sorbonne); Baptiste Françon (Centre d'Economie de la Sorbonne) |
| Abstract: | In this paper, we investigate the microeconomic effects of one major feature of the German Hartz Reforms (2003-2005), namely the reduction in compensation duration for older unemployed above 45 years of age. We look at two potential effects of this measure: on job take-up rates, but also on post-unemployment outcomes, through various indicators of matching quality (job stability, skill adequacy) and job quality (type of job contract). Applying difference-in-differences estimators, we show that the effects of this specific feature were rather scant. Regarding unemployment duration, only unemployed within a specific age group (55 to 59 years old) were affected by the reform. Evidence suggests that this is because they previously used unemployment schemes as a bridge to early retirement. In addition, there is some evidence of detrimental effects on job or matching quality. |
| Keywords: | Unemployment benefits, unemployment duration, job matching, job quality, early retirement, difference-in-differences. |
| JEL: | C41 J64 J26 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:14020&r=age |
| By: | Daniel Harenberg; Alexander Ludwig |
| Abstract: | We ask whether a PAYG-financed social security system is welfare improving in an economy with idiosyncratic and aggregate risk. We argue that interactions between the two risks are important for this question. One is a direct interaction in the form of a countercyclical variance of idiosyncratic income risk. The other indirectly emerges over a household's life-cycle because retirement savings contain the history of idiosyncratic and aggregate shocks. We show that this leads to risk interactions, even when risks are statistically independent. In our quantitative analysis, we find that introducing social security with a contribution rate of two percent leads to welfare gains of $2.2 \%$ of lifetime consumption in expectation, despite substantial crowding out of capital. This welfare gain stands in contrast to the welfare losses documented in the previous literature, which studies one risk in isolation. We show that jointly modeling both risks is crucial: 60% of the welfare benefits from insurance result from the interactions of risks. |
| Keywords: | social security, idiosyncratic risk, aggregate risk, welfare |
| URL: | http://d.repec.org/n?u=RePEc:stz:wpaper:eth-rc-14-002&r=age |
| By: | Gustav A. Horn; Alexander Herzog-Stein; Ansgar Rannenberg; Katja Rietzler; Silke Tober; Rudolf Zwiener |
| Abstract: | Effectively ending the crisis in the euro area remains the key policy challenge in 2014. As monetary policy has exhausted its conventional options, fiscal policy is called upon to provide an expansionary impulse by raising public investment. The high level of risk premiums in the crisis-hit countries continues to impair monetary policy transmission. If governments agreed on a temporary debt redemption fund, the ECB could engage in large-scale unconventional policy measures such government bond purchases to cancel out sovereign yield differentials in the euro area. Monetary policy could then stimulate the economy in the crisis-hit countries.The coalition agreement is pointing in the right direction regarding the labor market. The pension proposals, however, are patchwork and unable to solve the fundamental problem of an excessive lowering of the pension level and the concomittant higher risk of old-age poverty. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:imk:report:90-2014&r=age |
| By: | Delaney, Liam; Fink, Gunther; Harmon, Colm |
| Abstract: | The ways in which preferences respond to the varying stress of economic environments is a key question for behavioral economics and public policy. We conducted a laboratory experiment to investigate the effects of stress on financial decision making among individuals aged 50 and older. Using the cold pressor task as a physiological stressor, and a series of intelligence tests as cognitive stressors, we find that stress increases subjective discounting rates, has no effect on the degree of risk-aversion, and substantially lowers the effort individuals make to learn about financial decisions . |
| Keywords: | learning; risk aversion; discounting; financial decisions; stress |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2014-02&r=age |