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on Economics of Ageing |
| By: | Axel Börsch-Supan; Johannes Rausch; Hermann Buslei; Johannes Geyer |
| Abstract: | This paper presents model calculations for the development of the German statutory pension insurance (GRV). It is mainly based on the MEA-PENSIM model of the Munich Center of the Economics of Aging (MEA) supplemented by the PENPRO model of the DIW. The models project the development of demography and employment as well as the most important parameters of the GRV from assumptions and settings in several steps. The future development of birth rate, life expectancy and immigration are based on the mean assumptions of the 14th coordinated population projection of the Federal Statistical Office. For the employment forecast, we follow the assumptions of the 2019 pension insurance report for the years from 2019 to 2028. We then assume that the employment rates of men will not change in the future, but that employment rates for women will increase over time, as has been typical for recent cohorts. The base scenario is relatively optimistic compared to earlier projections and alternative current forecasts (e.g. Bundesbank 2019). However, the paper also presents the results of a wide range of alternative assumptions. According to the baseline scenario, the contribution rate to the GRV will exceed the 22% limit in 2033. The statutory replacement rate will fall below 43% in 2039. However, since wages tend to rise more strongly than the demographic burden, the purchasing power of a public pension will not decrease. Rather, it will continue to increase also in the future. This also applies to less optimistic scenarios. Demographic change will not lead to a decrease in pension benefits but only to a slower increase. Dieses Papier stellt Modellrechnungen zur Entwicklung der Gesetzlichen Rentenversicherung (GRV) vor. Es beruht vorwiegend auf dem MEA-PENSIM Modell des Munich Center of the Economics of Aging (MEA) und ergänzend auf dem PENPRO-Modell des DIW. Das Modell projiziert aus Annahmen und Setzungen in mehreren Schritten die Entwicklung der Demographie und Beschäftigung sowie der wichtigsten Kenngrößen der GRV. Annahmen zur künftigen Entwicklung von Geburtenrate, Lebenserwartung und Einwanderung richten sich nach den mittleren Annahmen der 14. koordinierten Bevölkerungsvorausberechnung des Statistischen Bundesamtes. Für die Beschäftigungsvorausberechnung folgen wir für die Jahre von 2019 bis 2028 den Annahmen des Rentenversicherungsberichts 2019. Danach nehmen wir an, dass sich die Erwerbsquoten der Männer in Zukunft nicht verändern, die Erwerbsquoten für Frauen jedoch kohortentypisch im Zeitverlauf ansteigen werden. Gegenüber früheren Projektionen und alternativen aktuellen Vorausberechnungen (z.B. Bundesbank 2019) ist das Basisszenario relativ optimistisch. Das Papier stellt jedoch auch die Ergebnisse einer weiten Bandbreite alternativer Annahmen vor. Laut Basisszenario wird der Beitragssatz zur GRV im Jahr 2033 die Grenze von 22% überschreiten. Das Sicherungsniveau wird im Jahr 2039 das Niveau von 43% unterschreiten. Da der Durchschnittslohn im Mittel jedoch stärker ansteigen wird als die demographische Belastung, wird die Kaufkraft der gesetzlichen Rente nicht fallen, sondern auch in Zukunft weiter steigen. Der Anstieg des aktuellen Rentenwertes fällt in den Jahren zwischen 2025 und 2035 zwar deutlich niedriger aus als der Anstieg der Bruttolöhne, die Renten werden jedoch in ihrer Kaufkraft selbst in dieser Zeit weiter ansteigen. Dies gilt auch für fast alle weniger optimistischen Szenarien. Der demographische Wandel führt also nicht zu einem Absinken von Rentenleistungen, sondern nur zu einem langsameren Anstieg. Die Mehrbelastung der GRV durch den demographischen Wandel muss nicht aus der Substanz, sondern kann aus dem Wachstum finanziert werden. |
| Keywords: | Public pensions, demographic change, replacement rate, projection |
| JEL: | H55 J11 J14 J21 J26 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1857&r=all |
| By: | Salamanca, Nicolás (Melbourne Institute of Applied Economic and Social Research); de Grip, Andries (ROA, Maastricht University); Sleijpen, Olaf (Maastricht University) |
| Abstract: | We show that people exposed to greater pension risk are less likely to invest in risky assets. We exploit a reform that links people's future pension benefits to their pension funds' funding ratio—a measure of the fund's financial health—making funding ratios a fund-specific measure of pension risk. The effect of pension risk is stronger for people who are better informed about their pensions, for retirees and pension-age non-retirees, and for wealthier people. The funding ratio does not affect investments in a pre-reform period, nor does it affect bequest intentions, (expected) retirement, or the motivations for saving. |
| Keywords: | individual portfolio choice, background risk, retirement planning, pension reform, The Netherlands |
| JEL: | D14 J22 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13077&r=all |
| By: | Danzer, Alexander M. (Catholic University of Eichstätt-Ingolstadt); Zyska, Lennard (Catholic University of Eichstätt-Ingolstadt) |
| Abstract: | This study identifies the causal effect of pension generosity on women's fertility behavior. It capitalizes on Brazil's expansion of the pension system to rural workers, whose pension wealth subsequently more than tripled. Event study, difference-in-differences and instrumental variable methods show that the pension reform reduces the propensity of childbearing of women in fertile age by 10% in the short-run. Completed fertility declines by 1.3 children within 20 years after the reform, reducing the contribution base of the Pay-As-You-Go pension system in the long-run. The fertility response is strongest at higher birth parities, among older women and among mothers with sons. |
| Keywords: | pension wealth, fertility, old-age security hypothesis, quasi-experiment, PAYG, Brazil |
| JEL: | J13 I38 H55 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13048&r=all |
| By: | Luigi Ventura (Department of Economics and Law, Sapienza University of Rome); Charles Yuji Horioka (Research Institute for Economics and Business Administration, Kobe University, Osaka University, Asian Growth Research Institute, and National Bureau of Economic Research) |
| Abstract: | In this paper, we analyze the wealth accumulation and saving behavior of the retired elderly in Italy using micro data from the "Survey of Italian Households' Income and Wealth," a panel survey of households conducted every two years by the Bank of Italy. We find that, on average, the retired elderly in Italy are decumulating their wealth (dissaving) but that their wealth decumulation rates are much slower than expected. Moreover, we also find that more than 40 percent of the retired elderly in Italy are continuing to accumulate wealth and that more than 80 percent are doing positive amounts of saving. Thus, the Wealth Decumulation Puzzle (the tendency of the retired elderly to decumulate their wealth more slowly than expected) appears to apply in the case of Italy, as it does in most other countries, before as well as after the Global Financial Crisis. Moreover, our regression analysis of the determinants of the wealth accumulation and saving behavior of the retired elderly in Italy suggests that the lower than expected wealth decumulation rates and dissaving of the retired elderly in Italy is due largely to bequest motives and saving for precautionary purposes, especially the former. |
| Keywords: | Aged; Bequests; Bequest intentions; Bequest motive; Elderly; Household saving; Italy; Inheritances; Intergenerational transfers; Life cycle hypothesis; Life cycle model; Precautionary saving; Retired elderly; Saving; Wealth; Wealth accumulation; Wealth decumulation; Wealth decumulation puzzle |
| JEL: | D12 D14 D64 E21 J14 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2020-16&r=all |
| By: | Gale, William; Gelfond, Hilary; Fichtner, Jason |
| Abstract: | We consider prospects for retirement saving for members of the millennial generation, who will be between ages 54 and 69 in 2050. Adequacy of retirement saving preparation among current and near-retirees is marked by significant heterogeneity, a characteristic that will likely hold for Millennials as well. In preparing for retirement, Millennials will have several advantages relative to previous generations, such as more education, longer working lives, and more flexible work arrangements, but also several disadvantages, including having to take more responsibility for their own retirement plans and marrying and bearing children at later ages. The millennial generation contains a significantly higher percentage of minorities than previous generations. We find that minority households have tended to accumulate less wealth than whites in the past, even after controlling for income, education, and marital status, and the difference appears to be growing over time for black households relative to whites. Whether these trends persist is central to understanding how the Millennials will fare in retirement. |
| Keywords: | Millennials, Saving, Retirement Security, Demographic Trends |
| JEL: | D14 E21 E6 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99196&r=all |
| By: | Nikolov, Plamen (State University of New York); Bonci, Matthew (University of Pennsylvania) |
| Abstract: | Precipitated by rapid globalization, rising inequality, population growth, and longevity gains, social protection programs have been on the rise in low- and middle-income countries (LMICs) in the last three decades. However, the introduction of public benefits could displace informal mechanisms for risk-protection, which are especially prevalent in LMICs. If the displacement of private transfers is considerably large, the expansion of social protection programs could even lead to social welfare loss. In this paper, we critically survey the recent empirical literature on crowd-out effects in response to public policies, specifically in the context of LMICs. We review and synthesize patterns from the behavioral response to various types of social protection programs. Furthermore, we specifically examine for heterogeneous treatment effects by important socioeconomic characteristics. We conclude by drawing on lessons from our synthesis of studies. If poverty reduction objectives are considered, along with careful program targeting that accounts for potential crowd-out effects, there may well be a net social gain. |
| Keywords: | life cycle, retirement, social protection, developing countries, crowd-out effect, inter vivos transfers |
| JEL: | D64 H31 H55 J14 J22 J26 O15 O16 R2 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13081&r=all |
| By: | SEKIZAWA Yoichi; KONISHI Yoko; IKARI Hiroshi |
| Abstract: | (Background and Methods) For this study, we called hypertension, dyslipidemia, and diabetes mild lifestyle-related diseases (MLD), and examined which people are more (less) likely to be diagnosed with MLD among the middle-aged and elderly people of Japan, focusing on lifestyle factors. Data from 11 years of the Longitudinal Survey of Middle-Aged and Older Adults by the Japanese Ministry of Health, Labor and Welfare were used for the analyses. A complementary log-log model was chosen for the analyses. (Results) For men, those who drink alcohol are more likely to be diagnosed with MLD. Former smokers are more likely to be diagnosed with MLD than current smokers. Men who perform light exercise four days or more per week or those who perform vigorous exercise one through three days per week are less likely to be diagnosed with MDL than non–exercisers. Men who monitor their food intake and brush teeth after meals are less likely to be diagnosed with MLD. For women, those who drink alcohol are less likely to be diagnosed with MLD. Former smokers are more likely to be diagnosed with MLD than current smokers. Women who perform medium exercise four days or more per week are more likely to be diagnosed with MLD than non–exercisers. Women who monitor their food intake or take vitamin or mineral supplements are more likely to be diagnosed with MLD. Women who eat a variety of foods and maintain appropriate body weight level are less likely to be diagnosed with MLD. (Reservation) Some of these results are inconsistent with previous studies, are contrary to current understanding, or are not well known. Hence, further studies with greater focus on causal relationships are required. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:20006&r=all |
| By: | Carole Bonnet (INED - Institut national d'études démographiques, IPP - Institut des politiques publiques); Antoine Bozio (IPP - Institut des politiques publiques, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Julie Tréguier (INED - Institut national d'études démographiques, IPP - Institut des politiques publiques) |
| Abstract: | Le rapport analyse les droits conjugaux dans le système de retraite français en confrontant les effets des dispositifs avec les objectifs qui leur sont attribués. Plusieurs pistes de réforme, compatibles avec un système de retraite universel en points et visant à améliorer l'efficacité de ces dispositifs, sont présentées. Les droits conjugaux dans le système français sont l'ensemble des droits dits dérivés, au sens où ils dépendent des droits directs d'un conjoint. Ces droits dérivés, ou pensions de réversion, avaient pour objectif de couvrir le risque veuvage. Ce risque peut être défini comme la baisse du niveau de vie suite au décès du conjoint, ou bien l'entrée en pauvreté suite au veuvage. Dans le système actuel, la réversion maintient, en moyenne, le niveau de vie au décès du conjoint. Cependant, cette moyenne cache de fortes disparités avec des effets de surcompensation et des pertes nettes de niveau de vie – notamment quand le conjoint survivant a une faible ou pas de pension de droit propre. Ces disparités proviennent des différences entre régimes de mode de calcul des pensions de réversion, dont l'origine tient à la fois à des philosophies différentes et à l'usage de la réversion pour des objectifs variés. L'augmentation des séparations a conduit à définir un nouveau risque à couvrir : le risque divorce. Dans la situation actuelle, c'est la réversion qui joue ce rôle. En cas de divorce, le montant de la pension de réversion dépend du parcours conjugal postérieur du conjoint décédé. De plus, la pension de réversion ne peut être versée qu'au décès du conjoint, potentiellement de nombreuses années après le divorce, participant à diminuer le taux de recours. La réversion apparaît donc comme un instrument inadapté à la couverture du risque divorce. Actuellement, tous les régimes de retraite limitent le bénéfice des pensions de réversion aux couples mariés, excluant ainsi les couples pacsés. Il est n'est pas toujours facile de justifier une telle différenciation, qui est, par ailleurs, mal connue des assurés. Les règles actuelles définissant les pensions de réversion sont très hétérogènes selon les régimes, différant sur l'âge d'ouverture des droits, la condition de durée de mariage, les règles de partage des droits entre conjoints survivants divorcés, la prise en compte ou non d'autres ressources, et le taux de pension de réversion. De telles disparités sont difficile à justifier, et l'unification des règles devrait être un objectif de la mise en place d'un système universel de retraite. |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02514740&r=all |
| By: | Gomes, Pedro Maia (Birkbeck, University of London); Wellschmied, Felix (Universidad Carlos III de Madrid) |
| Abstract: | The size of the public sector in terms of employment and compensation has a strong life-cycle dimension. We establish a quantitative partial-equilibrium life-cycle model with incomplete markets, private and public sectors, and risk-averse workers, and use it to (i) calculate three dimensions of public-sector compensation: wage, pension, and job-security premia, and (ii) quantify the effects of harmonizing the compensation in the two sectors. We find that the job-security and pension's premia are important forms of compensation to public-sector workers. Harmonizing the characteristics of public employment with those of the private sector would lower the unemployment rate and reduce government costs. |
| Keywords: | public-sector employment, public-sector wages, life cycle, unemployment, retirement, pensions, job security |
| JEL: | J45 E24 H30 H55 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13042&r=all |
| By: | Hippolyte d'Albis (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Ikpidi Badji (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Les inégalités intra-générationnelle sont les inégalités qui prévalent au sein d'une même classe d'âge. A l'aide des enquêtes « Revenus fiscaux » et « Revenus fiscaux et sociaux » menées entre 1996 et 2014, ces inégalités sont évaluées à l'aide du coefficient de Gini et du rapport inter-décile pour les revenus avant et après la redistribution opérée par le système social et fiscal. Des modèles Age-Cohorte-Période sont ensuite estimés pour distinguer les effets d'âge et de génération. Au cours du cycle de vie, les inégalités intra-générationnelles ont un profil en cloche et atteignent un maximum à 55-59 ans. Les inégalités sont significativement plus faibles chez les plus jeunes, quel que soit l'indicateur d'inégalités retenu, et chez les plus âgés, si on les mesure avec le rapport inter-décile. La comparaison des revenus avant et après redistribution révèle que le système social et fiscal réduit plus particulièrement les inégalités chez les jeunes. Lorsqu'elles sont mesurées avec le coefficient de Gini, les inégalités intra-générationnelles augmentent significativement de génération en génération. Lorsqu'elles sont mesurées avec le rapport inter-décile, la hausse est très forte pour les revenus bruts des générations nées à partir des années 1970. Le système social et fiscal a néanmoins compensé cette hausse car l'analyse du rapport inter-décile appliqué aux revenus disponibles ne révèle pas de différence significative entre les générations. |
| Keywords: | inégalités de revenus,classes d'âge,générations,modèle Age- Cohorte-Période |
| Date: | 2020–04–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-02531236&r=all |
| By: | Nils Grevenbrock (European University Institute); Max Groneck (University of Groningen); Alexander Ludwig (SAFE, University of Mannheim); Alexander Zimper (University of Pretoria) |
| Abstract: | This paper investigates the roles psychological biases play in deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied measures for cognitive weakness increase and relative optimism decrease with age. We document that direct measures of cognitive weakness and optimism share these trends. Our regression analyses conrm that these factors play strong quantitative roles in the formation of subjective survival beliefs. Our main finding is that cognitive weakness rather than optimism is an increasingly important contributor to the well-documented overestimation of survival chances in old age. |
| Keywords: | subjective survival beliefs, probability weighting function, confirmatory bias, cognition, optimism, pessimism |
| JEL: | D83 D91 I10 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2020-018&r=all |
| By: | FUJI Kazuhiko |
| Abstract: | As a super-aged society is coming in Japan, end-of-life care is becoming more important. Due to the fact that society sees death as a taboo, the market value of end-of-life care has not increased. To develop the end-of-life care industry to the level that will be necessary to address the needs of the coming super-aged society, support for start-up companies is necessary. Kumiko Shibata, president of Nihon Mitorishikai is training transition doulas and spreading the idea of end-of-life satisfaction. Introducing scientific analysis of relevant topics will aid in the advancement of her initiatives. In particular, conducting systematic surveys on views regarding life and death is essential, because many Japanese people in fact believe in reincarnation and this faith in reincarnation contributes to a sense of well-being, especially in elderly people. Compassion will play a major role in allowing Japan to flourish during the coming super-aged society. |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rpdpjp:19036&r=all |
| By: | Chong, Terence Tai Leung; Ka, Yiu Tung |
| Abstract: | This paper provides a first attempt in the literature to forecast the future evolution of income inequality with the demographic projections. The contribution of this paper is twofold. First, we establish a framework to quantify and analyze the effects of population ageing and the secular upward trend in educational attainment on income inequality. Second, we modify the human capital model and perform microsimulations to forecast a list of standard measures of income inequality of Hong Kong for the coming years of 2021, 2026 and 2031 based on the projected changes in the demographic structure of Hong Kong’s working population. The pseudo out-of-sample forecasts are reasonably close to the corresponding realized values. Our true out-of-sample forecasts suggest that income disparity will be alleviated in the next 15 years, as a result of the increasingly equal spread of level of schooling across the workforce. |
| Keywords: | Income Inequality; Demographic Projections; Population Ageing. |
| JEL: | D63 J11 |
| Date: | 2019–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99160&r=all |
| By: | Kochskämper, Susanna |
| Abstract: | Frauen erhalten im Durchschnitt je nach Datenquelle zwischen 37 und 46 Prozent weniger Renteneinkommen als Männer. Die OECD attestiert Deutschland damit den größten sogenannten 'Gender Pension Pay Gap' unter den OECD-Staaten. Auch wenn diese Zahl nur bedingt etwas über die finanzielle Situation der Seniorinnen aussagt, können dennoch Schlussfolgerungen gezogen werden. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwkkur:192020&r=all |
| By: | John Bailey Jones; Mariacristina De Nardi; Eric French; Rory McGee; Rachel Rodgers |
| Abstract: | Using data from the Health and Retirement Survey, we document the changes in assets that occur before a person's death. Applying an event study approach, we find that during the 6 years preceding their deaths, the assets of single decedents decline, relative to those of similar single survivors, by an additional $20,000 on average. Over the same time span, the assets of couples who lose a spouse fall, relative to those of similar surviving couples, by an additional $90,000 on average. Households experiencing a death also incur higher out-of-pocket medical spending and other end-of-life expenses. This elevated spending is sufficient to explain (in accounting terms) the asset declines observed for singles but falls short of explaining the declines observed for couples. Bequests from the dying spouse to non-spousal heirs such as children are more than sufficient to explain the remainder. |
| JEL: | D1 D12 D14 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26879&r=all |
| By: | Amin, Vikesh (Central Michigan University); Flores, Carlos A. (California Polytechnic State University); Flores-Lagunes, Alfonso (Syracuse University) |
| Abstract: | We estimate the effect of BMI on mental health for young adults and elderly individuals using data from the National Longitudinal Study of Adolescent Health and the Health & Retirement Study. To tackle confounding due to unobserved factors, we exploit variation in a polygenic score (PGS) for BMI within two complementary econometric methods that differ in the assumptions they employ. First, we use the BMI PGS as an IV and adjust for PGSs for other factors (depression and educational attainment) that may invalidate this IV. We find a large statistically significant effect of BMI on mental health for the elderly: a 5 kg/m2 increase in BMI (a difference equivalent to moving from overweight to obese) increases the probability of depression by 29%. In contrast, for young adults the IV estimates are statistically and economically insignificant. We show that IV estimates likely have to be interpreted as identifying a weighted average of effects of BMI on mental health mostly for compliers on the upper quantiles of the BMI distribution. Second, we use the BMI PGS as an "imperfect" IV and estimate an upper bound on the average treatment effect for the population. The estimated upper bounds reinforce the conclusions from the IV estimates. |
| Keywords: | BMI, depression, genetics, instrumental variables |
| JEL: | I10 I12 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13055&r=all |