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on Economics of Ageing |
| By: | KUREISHI Wataru ; YIN Ting |
| Abstract: | This paper investigates whether or not (i) the decline in consumption after retirement is only from "work related expenses" and "food consumption," and (ii) even though food spending at home and that outside the home decline after retirement, actual food intake remains constant, as Hurst (2008) pointed out, using Japanese micro data. The data we use in our analysis are from the Japanese Study of Aging and Retirement (JSTAR), a panel survey of elderly people aged 50 or older conducted by the Research Institute of Economy, Trade and Industry, Hitotsubashi University, and the University of Tokyo. Our estimation results show that the retirement of the household head decreases expenditure for food outside the home by about 17%, while there is no impact on expenditures for food at home and living expenses. Furthermore, we find that the retirement increases the time spent during weekdays on housework, shopping for necessities, and caring for children and grandchildren by about 25%. |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:15001&r=age |
| By: | David Boisclair ; Jean-Yves Duclos ; Steeve Marchand ; Pierre-Carl Michaud |
| Abstract: | We use simulation methods to analyze the impacts of certain proposed reforms to improve the coverage of longevity risk. This risk, which may in principle be adequately covered by classic defined-benefit pension plans, has been of particular interest in Quebec for some years now, notably due to the decline in the participation to such plans. Recent proposals which aim to increase the coverage of longevity risk mostly deal with expansion of the “2nd pillar" of the retirement income system, currently comprised of the Quebec Pension Plan. We therefore consider a key proposal of the D’Amours committee (the longevity pension), in addition to two other proposals: that of Mintz and Wilson, which aims to increase the generosity of the current regime, and that of Wolfson, which introduces a concept of contribution and benefit rates differentiated by income. Using data from Statistics Canada surveys, we analyze the internal rate of return (IRR) of these proposals for various types of individuals taking into consideration inequality in life expectancy, temporal variability of income, and interactions with taxation and the different retirement income support programs. We contrast the results with those obtained when opting instead for additional contributions into existing voluntary savings vehicles combined with a basic annuity purchased at retirement. |
| Keywords: | Longevity risk, retirement savings, inequality, life expectancy |
| JEL: | I14 J18 J26 J32 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:criacr:1406&r=age |
| By: | Holzmann, Robert (University of Malaya ) |
| Abstract: | This policy paper presents key findings and suggestions on Malaysia's old-age financial protection system within the context of the country's broader social security framework. The trademark policy approach focusing on job creation instead of expanding social security programs served the country well to move it quickly to a high-middle income level. But to join the club of high-income countries in a sustainable manner may require the country to review its approach to social security, including the way old-age income support is provided, and to address the main current weaknesses: fragmentation across economic sectors, lack of an enabling political environment, incomplete benefit coverage, low mandated savings level, and inadequate disbursement options given the challenges of projected population aging and socioeconomic shifts. To address the old-age financial protection challenge, the paper outlines two key options for Malaysia's Employees Provident Fund, the country's central pension pillar: (i) moving from a mere retirement savings investment fund to a fully-fledged pension fund that offers some minimum annuities; or (ii) more radically, moving the benefits toward a Non-Financial Defined Contribution scheme with the fund's resources used as its major reserve fund. Whatever approach is considered, the reform discourse would benefit from changes in the overall governance structure of social security and from a comprehensive research agenda that offers an evidence based decision making. |
| Keywords: | Employees Provident Fund, social security, reform options, annuities |
| JEL: | H55 O16 J14 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp96&r=age |
| By: | Arzybaev, Askarbek |
| Abstract: | Many public pension systems worldwide are experiencing difficult economic period as its economy is in the period of financial crisis which affected to the social budget sustainability. Population aging and last decade economic circumstances are the factors the pension systems should overcome for maintaining either appropriate level of benefit amount for decent life in the developed countries or minimum subsistence allowances in developing and poor countries. The only prescription how to keep the pension system resistible is its periodical renovation by testing the system on (i) soundness and effectiveness within national financial and economic system, (ii) appropriateness of its organization and administration, (iii) compliance of parameters with international standards. The article presents Cohesive Testing System – new method of national pension systems testing and indexing based on international standards of pension security and new CTS indices of the researched set of pension systems. |
| Keywords: | Pensions, pension benefit, replacement rate, PAYG, dependency ratio, cohesive testing, funded pension system, statistical formula, international donors, social security. |
| JEL: | G00 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61396&r=age |
| By: | Nicholas-James Clavet ; Jean-Yves Duclos ; Bernard Fortin ; Steeve Marchand |
| Abstract: | The federal government announced in its 2012 budget its intention to delay the age of eligibility for Old Age Security and the Guaranteed Income Supplement from 65 to 67 years. By the time the policy is fully implemented (i.e., in 2030), this delay will have increased net revenues of the fedral government by 7.1 billion dollars per year (in constant 2014 dollars), but will reduce net provincial reveues by 638 million dollars. With constant labour and savings behaviour, this delay would also increase the percentage of individuals aged 65 and 66 years who are in the low income group from 6% to 17% (for an additional 100,00 low-income seniors in this age group) and would be most harmful to low-income seniors and to women. Alternative reforms to the Old Age Security could make it possible to aochieve similar effects on public finances without having such large impacts on the low income rate among seniors. |
| Keywords: | Pensions, population aging, poverty, public finance, Canada |
| JEL: | C53 D31 D63 H55 J11 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:criacr:1410&r=age |
| By: | Yumi Saita ; Chihiro Shimizu ; Tsutomu Watanabe |
| Abstract: | In this paper, we empirically investigate how real estate prices are affected by aging. We run regional panel regressions for Japan and the United States. Our regression results show that, both in Japan and the U.S., real estate prices in a region are inversely correlated with the old age dependency ratio, i.e. the ratio of population aged 65+ to population aged 20-64, in that region, and positively correlated with the total number of population in that region. The demographic factor had a greater impact on real estate prices in Japan than in the U.S. Based on the regression result for Japan and the population forecast made by a government agency, we estimate the demographic impact on Japanese real estate prices over the next 30 years. We find that it will be -2.4 percent per year in 2012-2040 while it was -3.7 percent per year in 1976-2010, suggesting that aging will continue to have downward pressure on land prices over the next 30 years, although the demographic impact will be slightly smaller than it was in 1976-2010 as the old age dependency ratio will not increase as much as it did before. |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e68&r=age |
| By: | Beetsma, R.M.W.J. (Tilburg University, School of Economics and Management ); Lekniute, Z. ; Ponds, E.H.M. (Tilburg University, School of Economics and Management ) |
| Abstract: | Most public-sector pension plans in the United States provide quite generous defined benefits. Long-term projections show that full payment of these promises threatens the finances of many state and local employers, which implies that taxes will have to be increased or pensions and/or other public expenditures reduced. This article analyzes the effectiveness of measures aimed at improving the sustainability of these plans.We consider the impact of contribution increases, benefit reductions, and adjustments in the pension fund’s investment strategy. Since a pension fund can be seen as a zero-sum game, these interventions imply value redistributions among current and future plan participants and current and future tax payers. We use the value-based asset–liability management (ALM) method to estimate the value of those transfers. These imply massive value redistributions from taxpayers to plan participants that could exceed 20% of American GDP. Hence, plan sustainability may be achieved only through either substantially higher contributions or lower benefits. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:55b5bb2c-2212-4fbf-b701-b5cb3bee0a2f&r=age |
| By: | Alicia H. Munnell ; Jean-Pierre Aubry ; Geoffrey T. Sanzenbacher |
| Abstract: | Many state and local governments have responded to challenges facing their pension plans by cutting benefits. Will these cuts make it harder for state and local governments to recruit and retain high-quality workers? To date, the answer has been difficult to obtain; most micro-level datasets contain information on the existence of pensions but not on pension generosity. To get around this constraint, this study uses a unique source, the Public Plans Database, to obtain data on the pension generosity of state and local workers’ pensions. These data are merged with the Current Population Survey to investigate how pension generosity affects the gap between the private sector wage of workers that states and localities recruit from the private sector relative to the workers that they lose to it. The findings suggest relatively generous pensions help reduce this “quality gap,” making it easier for state and local employers to recruit high-earning workers from the private sector and retain those workers. The effect is similar regardless of whether employer or employee contributions finance the benefits. The study suggests states should be cautious as they cut their pension benefits and that a strategy to maintain benefits by shifting some costs onto employees may help maintain states’ ability to recruit and retain high-quality workers. |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2015-1&r=age |
| By: | Velarde, Melanie ; Herrmann, Roland |
| Abstract: | In order to test whether a retirement-consumption puzzle does exist, we examine how food-related time use alters within the 50+ generation in Germany due to retirement. Based on the German Time-Use Survey, time-use patterns of retired and non-retired persons are compared statistically and determinants of time-use are elaborated by the use of double-hurdle and multiple regression models. There is no indication of a retirement-consumption puzzle but of a planned behavioral change in a new phase of life. Work-related food-away-from-home con-sumption is substituted by food production and consumption at home and associated shopping activities. Leisure-related away-from-home consumption gains importance for a portion of pensioners. These impacts are strong and highly significant for German households. |
| Keywords: | Retirement-consumption puzzle, food-at-home consumption, food-away-from-home consumption, household production, time-use data, generation 50+, Consumer/Household Economics, Demand and Price Analysis, |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae14:182829&r=age |
| By: | John S. Heywood ; Uwe Jirjahn |
| Abstract: | This paper focuses on the German labor market for older workers. It does so in comparison with other countries and with a unique focus on the role of employer incentives for retaining and hiring older workers. It argues that while employment of older German workers has improved due to changes in government policy, the labor market for older workers remains characterized by far less mobility and opportunity. While we recognize the potential explanations of reduced productivity and age discrimination, we review evidence pointing to the importance of life-cycle contracts (Hutchens 1986, Lazear 1979). These contracts can be efficient but typically imply that older workers will have difficulty being re-hired into career jobs after separation. We suggest that attempts to reduce or eliminate such life-cycle contracts are likely to be counter-productive but suggest how other countries, particularly Japan, have dealt with this issue. |
| Keywords: | Older workers, deferred compensation, productivity, discrimination, labor market institutions |
| JEL: | J14 J33 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:trr:wpaper:201502&r=age |
| By: | Yanan Li (Cornell University ); Victoria Prowse (Cornell University ) |
| Abstract: | In this paper, we explore and compare how older and younger couple house- holds use adjustments in the wife’s labor supply to mitigate the e?ects of negative shocks to the husband’s employment status. Using di?erence-in-di?erences match- ing methods, we document a substantial added worker e?ect for younger house- holds. However, the wives of older men do not increase employment in response to their husbands’ negative employment shocks. Instead, in older households, fe- male unemployment increases. These results are consistent with older women being constrained by the labor market in the extent to which they can adjust their labor supply to mitigate the e?ects of spousal employment shocks. Our ?ndings suggest that spousal labor supply is not an e?ective intra-household insurance device for older households. |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp309&r=age |
| By: | Tetsuo Ono (Graduate School of Economics, Osaka University ) |
| Abstract: | This study presents a two-period overlapping-generations model featuring en- dogenous growth and intergenerational conflict over fiscal policy. In particular, we characterize a Markov-perfect political equilibrium of the voting game between gen- erations, and show the following results. First, population aging incentivizes the government to invest more in capital for future public spending, and thus produces a positive effect on economic growth. Second, when the government finances its spending by issuing bonds, an introduction of a balanced budget rule results in a higher growth rate. Third, to obtain a normative implication of the political equi- librium, we compare it to an allocation chosen by a benevolent planner who takes care of all future generations. Here, we show that the political equilibrium attains a lower growth rate than that in the planner's allocation. |
| Keywords: | Economic Growth; Government Debt; Overlapping Generations; Pop- ulation Aging; Voting |
| JEL: | D72 D91 H63 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1423r&r=age |
| By: | Hinrichs, Karl |
| Abstract: | The 2008 financial market crisis, followed by the Great Recession and sovereign debt crises in several EU countries have triggered drastic reforms of old-age security systems. They were supposed to ensure the financial viability of public pension schemes in the short and long run and/or to realize notions of intergenerational fairness. Most urgently, however, was regaining room for fiscal manoeuvre and obtaining financial aid from supranational organizations (such as IMF or EU). These pension reforms differ from previous changes with regard to their scope and the political process. (1) They were large, thus causing a substantial and immediate impact on the living conditions of present and future retirees and, sometimes, changed the hitherto pursued policy direction. (2) The post-2008 reforms swiftly passed the legislative process and were implemented at short notice. Hence, they can be considered as "rapid policy changes". This paper analyses pension reforms in eight crisis-shaken EU countries: Greece, Hungary, Ireland, Italy, Latvia, Portugal, Romania, and Spain. It explores both reform contents and circumstances which led to the respective changes or facilitated them. As is shown, the challenges, which those countries were (or still are) confronted with, allowed or enforced alterations that would not have been feasible otherwise, or which would rather not have been initiated by the respective governments with regard to the political consequences. Moreover, cross-national comparison reveals similarities and differences and also sheds light on the social consequences that are already visible today. |
| Abstract: | Die Finanzmarktkrise von 2008 und in deren Gefolge die Große Rezession sowie Staatsschuldenkrisen in verschiedenen EU-Ländern haben einschneidende Reformen der Alterssicherungssysteme ausgelöst, welche die Finanzierung der Renten kurz- und langfristig sicherstellen und/ oder Vorstellungen von Generationengerechtigkeit realisieren sollen. Dringlicher war es jedoch, den fiskalischen Manövrierspielraum wieder zu erweitern und Kredithilfen von internationalen Geldgebern (IWF, EU) zu erlangen. Diese Rentenreformen unterschieden sich von früheren im Hinblick auf den Umfang und den politischen Prozess. (1) Sie waren groß, zeitigten demzufolge eine signifikante und unmittelbare Wirkung auf die Lebensbedingungen der jetzigen und künftigen Rentenbezieher, und manchmal wurde auch die bis dahin verfolgte Politikausrichtung verändert. (2) Die nach 2008 erfolgten Reformen passierten rasch den Gesetzgebungsprozess und wurden ohne lange Übergangsfristen umgesetzt. In diesem Papier werden die Rentenreformen in acht krisengeschüttelten EU-Ländern betrachtet, nämlich Griechenland, Irland, Italien, Lettland, Portugal, Rumänien, Spanien und Ungarn. Dabei geht es um die Inhalte dieser Reformen und die Umstände, die jeweils zu diesen Veränderungen geführt bzw. sie ermöglicht haben. Gezeigt wird, dass die Herausforderungen, mit denen diese Länder konfrontiert waren (oder sind), einschneidende Veränderungen erlaubten bzw. erzwangen, die ansonsten kaum durchsetzbar gewesen oder in Anbetracht der politischen Konsequenzen von den jeweiligen Regierungen so nicht in Angriff genommen worden wären. Weiterhin werden im Ländervergleich die Gemeinsamkeiten und Unterschiede beleuchtet sowie nach den bislang erkennbaren sozialen Konsequenzen gefragt. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zeswps:012015&r=age |