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on Economics of Ageing |
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dealing with the interaction between demographic change and the
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| By: | Elena Jarocinska; Anna Ruzik-Sierdzinska; Theo Nijman; Andres Vork; Niku Määttänen; Robert Gál |
| Abstract: | Life expectancies are rapidly increasing and uncertain in all countries in Europe. To keep pension systems affordable, policy reforms are to be implemented which will encourage individuals to work longer. In this paper we analyze the impact of working and living longer on pension incomes in five European countries and assess the impact of these policy reforms on the financial well-being of the elderly. The paper shows the diversity of the policy measures taken in these countries. Furthermore, we analyze the financial incentives for working longer and postponing claiming pension benefits and we assess the attractiveness of these options. Lastly, we study how increases in life expectancies and survival probabilities affect pension incomes. |
| Keywords: | pension benefits, life expectancy, retirement age, policy reforms |
| JEL: | H55 J11 J26 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnstan:0476&r=age |
| By: | Daniel Martin (Paris School of Economics); Chris Tonetti (Stanford GSB); Andrew Caplin (New York University); Joseph Briggs (New York University) |
| Abstract: | We develop a model of late in life job search that accounts for end of life labor force exit and re-entry. Our key assumptions are that job offers consist of both wage and complex non-wage characteristics and that older workers care more about the non-wage characteristics of a job. In equilibrium, young workers choose jobs with high wages, but poor non-wage characteristics, while older workers are willing to trade off lower wages for better non-wage characteristics. However, due to rational inattention, older workers may ex-post regrettably accept low wage jobs with poor non-wage characteristics. Such mistakes produce welfare losses and generate employment patterns in the model consistent with the empirical patterns of older US workers. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:287&r=age |
| By: | David Love (Williams College); Gregory Phelan (Williams College) |
| Abstract: | This paper studies how hyperbolic discounting affects stock market participation, asset allocation, and saving decisions over the life cycle in an economy with Epstein-Zin preferences. Hyperbolic discounting affects saving and portfolio decisions through at least two channels: (1) it lowers desired saving, which decreases financial wealth relative to future earnings; and (2) it lowers the incentive to pay a fixed cost to enter the stock market. We find that hyperbolic discounters accumulate less wealth relative to their geometric counterparts and that they participate in the stock market at a later age. Because they have lower levels of financial wealth relative to future earnings, hyperbolic discounters who do participate in the stock market tend to hold a higher share of equities, particularly in the retirement years. We find that increasing the elasticity of intertemporal substitution, holding risk aversion constant, greatly magnifies the impact of hyperbolic discounting on all of the model's decision rules and simulated levels of participation, allocation, and wealth. Finally, we introduce endogenous financial knowledge accumulation and find that hyperbolic discounting leads to lower financial literacy and inefficient stock market investment. |
| Keywords: | Hyperbolic discounting, Epstein-Zin, portfolio choice, financial literacy |
| JEL: | G11 G22 D91 E21 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2015-11&r=age |
| By: | Don Drummond; Evan Capeluck |
| Abstract: | This report presents long-term fiscal and economic projections for Canada, the provinces and the territories for the 2014-2038 period, and discusses their implications for budgetary balance at the provincial/territorial level. In particular, it examines whether economic growth and hence revenue growth (assuming no major changes in tax policy) will be sufficient to fund likely spending pressures. Economic growth is generally projected to be slower over the next 24 years than since 2000. As a result, all, or almost all, provinces and territories, depending upon the economic assumptions, will not be able to meet the test of balancing revenue growth with growth in public spending. Hence, without tax rate increases or action to curtail spending growth, there will be pressure for progressively larger deficits. |
| Keywords: | Projection, Ageing, Fiscal Sustainability, Demographics, Canada, Budget, Provinces, Revenue Growth, Taxes, Economic Growth |
| JEL: | E17 E27 E37 E47 E60 E62 E66 H20 H50 H51 H60 H61 H62 H68 H70 H71 H72 J10 O40 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:1508&r=age |